Employees Provident Fund (EPF) provides retirement planning for all government salaried employees in India. It is a savings scheme organized by the Employees Provident Fund organization and it is mandatory for all government employees. Under these schemes, employees contribute a part of their salary every month so that they can get a better value at the time of retirement. In the month of May 2025, the government of India has also increased the value of dearness allowance, which has increased the value from Rs. 1000 to Rs. 7500+DA in schemes like EPS – 95. Apart from this, the question also arises 1800 EPF Vs 12% EPF – Which Is Better For Retirement Plan and also provides a better amount at the retirement age.
1800 EPF Vs 12% EPF
If we look closer at 1800 EPF and 12% EPF, the contribution rate of 12% is better than basic salary and Dearness Allowance while in others, the employee can contribute a fixed amount of 1800 per month. This amount of 1800 is contributed when the basic salary and DA of the employee is Rs. 15000 or less. The EPF scheme provides a minimum of 8.50% interest rates to their contributors. Generally, the 1800 Rs. of contribution in the EPF is mandatory, if the salary is under the 15000 of the employees.
On the other hand, the maximum limit of 12% of EPF and DA will be increased so the contributions will also be based on the salary. If we look at these two aspects carefully, we will clearly understand the difference in their profits. If an employee with a basic salary of Rs. 30,000 and DA contributes Rs. 1800 to his EPF account, then by the age of 60, the employee may get a total of Rs. 15,20,000 with an annual increase of 5%.
On the other hand, if an employee with 12% basic salary + DA EPF is calculated, then by the age of 60, his total investment will be Rs. 54,00,168 and with interest the amount will be Rs. 1,63,1800. So according to this data, we can say that the 12% and above contribution is the best for every employee if they have the best basic pay with dearness allowance.
Which Is Better For Retirement Plan?
The employers can only contribute only 12% in PF and it is based on the basic salary. The contribution of the PF is divided into two parts – first is 8.33% for the employees’ Pension and second is 3.67% for EPF. These EPS’ consist of contributions a minimum of 13.61% of employers’ basic salary.
If any employee does not contribute to EPF then can contribute 0.5% in EDLI Schemes. The employee can directly contribute only 3.67% to his EPF account while the cost of the employer related to this PF can be only about 12%. However, the rate of all these contributions is directed by the pension scheme.
EPF Maximum Limit Contribution By Employees
The maximum limit of contribution is 12% which is mandatory for all the employees. If any employers can choose the more than 12% contribution then it will be the Voluntary Provident Fund. the contribution of the EPF will be counted through the per month wage ceiling amounts.
If any employee can contribute a minimum Rs. 1200 per month then the employees will get the pension minimum of Rs. 15,000 or more.
FAQs Related To 1800 EPF Vs 12% EPF
If my basic salary and DA below the Rs. 15000 so what can i contribute in the EPFs?
The employees can contribute a minimum amount of Rs. 1800 and they get 5% of interest rate on it at the time of retirement.
If any employee can have a large amount of basic pay so that they can get a large amount at the time of retirement?
Yes, the pension amount is generally based on the contributions at the time of service.
Is there any option of contributing more than the requirements in EPF?
Yes, the employers can contribute more than the requirements in EPF and after the retirements they can get the best pensions monthly.
Soniya Sahota is Finance professional with MBA Finance degree from University Of London, she completed her Master’s in ’15. Now she is working as a senior content editor at D News, Finance, Education & Sports News portal.