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The Employees' Provident Fund (EPF) is the most common Retirement Planning option for the salaried class of India. It is important part of one's salary, plays an essential role in building up a sufficient retirement corpus. The fund is built up by the regular monthly  contribution from both Employer & employees. While employees divert minimum 12 per cent of their basic salary towards EPF, employer's contribution cannot exceed the pre-determined level of 12% of the basic salary.The employer's contribution would be mandatory , whereas in some organizations the employees may get an option not to contribute for the EPF. By investing in the EPF, we can also avail tax benefits under Section 80C of the Income Tax laws.

The EPF schemes are specifically made to attain financial security during post-retirement life. Don't underestimate the power of compounding and what it can do to retirement savings over the long term.The corpus, along with the incremental contribution after each year, can reap very high benefits in the long run. For instance, the 8.5% interest earned on the EPF can help a person with a basic salary of Rs 25,000 a month accumulate a gargantuan Rs 1.65 crore in 35 years. The EPF, if properly utilized, can even solve half of the problems of the post retirement fund requirement.

Its not prudent to treat EPF as emergency fund & using it to fulfill certain short term goals. The govt discourages from withdrawing from EPF. When you withdraw you do not let the power of compounding to come into play. Thus EPF should be preserved to serve its purpose. There is an option to avail a loan on the Employee Provident Fund amount in one's account, which is used by a lot of investors as the loan rates are lesser than the rates offered by banks for personal loans. In case of an individual who has worked with more than one employer , Instead of withdrawing money from the EPF on switching jobs, one should transfer the balance to the new account with the new employer. Financial advisers recommend that you put this down among the list of priorities at the new workplace. In case the amount is not transferred and is kept idle, after three years of inactivity, the balance will stop earning interest. Therefore, one should ensure that the accounts are rolled over and clubbed with the new account to ensure proper capital appreciation. In order to overcome the trouble of transferring and convenient management of multiple EPF accounts belonging to their older companies, the EPFO (Employees' Employee Provident Fund Organization) is now providing a Unique Account Number (UAN) where multiple accounts can be managed through a single portal.

Conclusion: EPF is one of the strongest investment tool for retirement planning .Its the easiest way to invest, attain financial security during post-retirement life .The fixed returns and the taxability feature also make it an attractive option for investment. Following the prudence concept ,one should not rely on the EPF alone, that is because due to offering fixed returns, it does not allow you to avail the benefits of the long-term growth in the market. Also, the corpus which we receive at the time of retirement may not be sufficient for the post retirement life, considering medical inflation. In view of this, some other investment options should also be explored to ensure complete fulfillment of the retirement goal.Invest to meet your financial goals and not to just save taxes.Thus properly plan your retirement and  secure your future.

Binish Zahra

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