Owing to its favourable tax benefits, the Employee Provident Fund is considered one of the most important investments for your retirement. The PF contribution is a part of your gross salary, which gets deposited into your PF account every month. Alongside your contribution, your employer also deposits the same amount into your PF account on a monthly basis. With the help of the Provident Fund scheme, you can build a hefty savings corpus to fund your post-retirement needs and lifestyle.
Based on both your and your employer’s contributions, every year you will receive a PF slip from your employer that contains the details about the contribution and the interest your investment has earned in a year. It is important to understand the particulars of your PF statement in detail so that you can attend to discrepancies and glitches at the earliest.
Here are the 3 fields you must know about to get a better understanding of your PF statement.
- Basic details
This PF field contains the name of the company where you work and its establishment ID. Here you can also find your name, date of birth, your joining date, employee ID and other basic details that validate your identity.
- Account number
If you work in an un-exempted organisation, you are allotted an alphanumeric number as your Provident Fund account number. The first two alphabets of the account number represent the state and the next three alphabets denote the regional office in the state.
The first 7 numerals are the establishment ID of the organisation, the next three are the extension ID of the establishment and the last 7 numbers represent your employee ID. You must note that PF account number is different from Universal Account Number (UAN) and changes if you switch your jobs, unlike the UAN which remains the same.
- Account balance
Now that you have checked all the basic details in your PF statement, proceed to check the account balance and interest earned during the year. You must check following particulars to verify your account balance.
- Opening balance
If you already had an existing PF account during the financial year, you can check the opening balance in the statement. This opening balance includes your contribution, your employee’s contribution and the interest earned during the previous financial year.
This PF field shows the monthly contributions of both you and your employer individually. It also contains the amount that is contributed towards EPS (Employees’ Pension Scheme).
Interest will be credited in your PF account annually. The interest earned on both of you and your employer’s contribution is calculated on the monthly balance of your PF account. This interest rate for calculation of PF is depended on the norms declared by the government.
- Voluntary provident fund
If you wish to contribute more than the mandatory 12% in the PF account, you can do so and this is shown as ‘voluntary provident fund’ head in your statement.
In case, you have withdrawn any amount from your PF account during the year, then it will be shown in the statement and it will be accounted for. The Employees’ Provident Fund Organisation EPFO has prescribed certain guidelines, which you need to fulfil to withdraw money from your PF account.
- Closing balance
The closing balance of your PF statement represents the total of your opening balance, your contribution during the year, your employer’s contribution during the year and the interest earned on the same. It will now become the opening balance for your next year’s PF statement.
Apart from the PF, there are several other short-term investment options such as company deposits, mutual funds, debt instruments, savings account and so on, where you can invest your savings or excess cash to create a perfect financial plan. For example, invest in FDs to earn up to 8.75% with NBFCs. This can be a boon for your retirement, giving your assured returns over time. Start planning your investments for retirement today to enjoy your golden years more comfortably.