Learn · Your first salary
PF: the money you save without noticing
What EPF, EPS and VPF are, where the money goes, and when you can touch it.
3 min read
12% of your basic, every month
If your employer is covered by EPF, 12% of your basic pay is taken from your salary and put in your EPF account. Your employer adds another 12% on top, which is part of your CTC.
₹28,800 a year
Your own PF on a ₹6 lakh CTC with 40% basic
Your employer puts in the same again. On a ₹50,000 monthly basic it would be ₹6,000 a month from each side.
Where it goes
Your employer's ₹2,400 a month, on ₹20,000 basic
- Pension (EPS)₹1,250
- Your EPF account₹1,150
EPS takes 8.33%, capped at ₹1,250 a month, and pays a pension after 10 years of service. The rest goes to EPF, a lump sum you get back. Your own ₹2,400 all goes to EPF.
It earns interest
EPF earns a rate the government declares every year. It was 8.25% for 2024-25. Interest on your own contributions above ₹2.5 lakh a year is taxable; for most first jobs that limit is far away.
VPF: putting in more
Voluntary PF lets you add more than 12% of basic, up to all of it, at the same interest rate. It's safe and earns well, but the money is hard to take out early. Build your emergency fund first.
Myth
When I change jobs, my PF is lost.
Fact
Your UAN (Universal Account Number) stays with you. Transfer the old account to the new employer instead of withdrawing it, and the interest keeps adding up.
Taking it out
You can withdraw in full after leaving a job and staying unemployed for 2 months, or partly for things like a house, marriage or medical costs. If you withdraw within 5 years of continuous service, it can be taxed.
Words from this lesson
Next in Your first salary: Professional tax: the small line on your payslip