How to read your PF statement: A guide to understanding your retirement savings

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Your Provident Fund (PF) statement is an essential financial document that helps you track your retirement savings and contributions made by your employer and yourself. Understanding how to read your PF statement can give you valuable insights into your financial security for the future. Here’s a guide to understanding the key components of a PF statement and how to interpret them.

1. Locate your member ID and UAN

Each PF account is linked to a unique Member ID and Universal Account Number (UAN).

Member ID: This is specific to each employer. If you change jobs, you get a new Member ID, but your UAN remains the same.

UAN: A unique 12-digit number assigned by the Employees’ Provident Fund Organization (EPFO) that helps track all your PF accounts, even if you switch employers.

The UAN is crucial as it allows you to view and manage your PF accounts online through the EPFO portal or app.

2. Check your contribution details

A significant section of your PF statement will display contributions made by you and your employer each month.

Employee contribution: This is the amount you have contributed, typically 12% of your basic salary.

Employer contribution: The amount your employer has contributed. Note that only part of this contribution goes into your EPF account, while the rest is allocated toward the Employee Pension Scheme (EPS).

Total contribution: The combined total of your and your employer’s contributions.

This breakdown shows how much is regularly added to your PF account and can give you a good idea of your growing retirement savings.

3. Understand the breakdown of employer contribution

Your employer’s contribution is split between EPF and EPS. Here’s how it works:

EPF (Employer’s Contribution to PF): Roughly 3.67% of the employer's contribution goes into your PF account.

EPS (Employer’s Contribution to Pension): About 8.33% of the employer's contribution is allocated to the Employee Pension Scheme.

It’s essential to remember that EPS amounts may not appear in the PF balance section of your statement, as they go directly into a pension fund managed separately.

4. Check interest earned on your PF

The government sets the annual interest rate on PF balances, and this interest is added to your account at the end of each fiscal year.

Interest on employee contribution: The interest accrued on your own contribution.

Interest on employer contribution: The interest accrued on your employer’s contribution.

The interest earned is tax-free and compounded annually, helping your retirement savings grow over time. By checking this amount regularly, you can get a sense of how much your savings are increasing.

5. Verify withdrawals and transfers

If you’ve made partial withdrawals or transferred your PF balance from a previous employer, these transactions will also appear on your statement.

Withdrawals: Amounts you have taken out, typically for permitted purposes like home loans, medical expenses, or marriage.

Transfers: If you’ve moved your PF balance from one Member ID to another due to a job change, this transfer should reflect in your statement.

This section helps you track your PF usage and ensures that all transfers are accurately processed.

6. Look for the pension contribution balance

Your statement may also show the balance under the EPS section, which contributes toward a pension fund. Unlike the EPF, EPS is not available for withdrawal until retirement age, though partial withdrawals are allowed in some cases.

Pension contribution balance: Shows the total amount in the EPS, a separate fund managed by the EPFO for providing a pension after retirement.

The pension balance is an important component of your retirement plan, as it helps secure a monthly income once you reach the retirement age of 58.

7. Track yearly summary

Most PF statements include an annual summary that provides a snapshot of total contributions, interest earned, and withdrawals or transfers.

Opening balance: The balance at the beginning of the fiscal year.

Yearly contributions: The total amount contributed over the year, combining both employee and employer contributions.

Interest earned: The total interest added to your account over the year.

Closing balance: The balance at the end of the fiscal year.

This section is helpful for tracking your PF account’s growth over the long term and can be useful for financial planning.

8. Use the EPF passbook for detailed analysis

The EPF passbook, available on the EPFO portal, provides a detailed month-by-month breakdown of all transactions, including contributions, interest, withdrawals, and transfers.

How to access: Visit the EPFO website or app, log in with your UAN, and download your EPF passbook for detailed insights.

The passbook is especially useful for individuals who want to closely monitor their contributions and account activity.

Understanding your PF statement is a valuable step toward managing your retirement savings. By regularly checking your PF account balance, contributions, and interest earned, you can keep track of your retirement fund’s growth and make informed financial decisions. Make it a habit to download and review your statement or passbook periodically to stay updated on your retirement savings and ensure everything is in order.