EPF allows working professionals to contribute a portion of their salary every month to EPF. For most individuals it is a great way to save for their future or immediate needs. There is no doubt the EPF offers tax-free savings with easy liquidity options for the investor.
How EPF works?
Every employer generates a Universal Account Number of an UAN for its employees. This number does not change even if the employee switches jobs throughout their career. Each month, the employer deposits a portion of the employee’s salary towards EDLIS or Employee Deposit Linked Insurance Scheme, and a part towards the administrative charges. While, the remaining portion is contributed to the employee’s PF account. This process is entirely managed by EPFO.
Employees, as per the government rule can break their Provident Fund (PF) savings at the time of maturity of the deposit or when they retire or at a premature duration for personal reasons.
For government employees EPF is entirely exempted from tax. While, one can claim tax deduction up to Rs. 1 lakh. The current interest rate on EPF stands at 8.55% as provided by the government.
So, coming back to the question is EPF enough as a retirement corpus. This is a subjective choice. But, I suggest investing some money in low-risk, tax-saving schemes as well. For instance, Fixed Deposit they also help to earn higher interest income and accumulate wealth to manage all kinds of financial obligations. Being free of market fluctuations they offer a secure investment tool and helps to diversify your portfolio.
Also, Read Relate Article: HOW DOES A PROVIDENT FUND WORK?
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About Author:Aman is working in the domain of Investment management in one of the top universities. He has published research papers and case studies in Investment and Fixed Deposit marketplace. He is an avid blogger in the domain of Investment management. you can also find him on social networking platforms. Archives
August 2022
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