Definition of EPF (Employees' Provident Fund)
The Employees' Provident Fund (EPF) is a mandatory retirement savings scheme for salaried employees in India, managed by the Employees' Provident Fund Organisation (EPFO). Both the employee and employer contribute 12% of the basic salary each month to the EPF account.
The EPF currently earns interest at approximately 8.15% per annum, declared annually by the EPFO. The maturity amount is tax-free if the employee has completed 5 years of continuous service. The EPF also includes a pension component (EPS) which provides a monthly pension after retirement.
For FIRE planners, EPF is part of the retirement corpus but comes with restrictions: full withdrawal is only allowed after age 58, or on retirement/unemployment. This liquidity limitation must be accounted for in early retirement plans.