Reading that provident fund statement

The Employees’ Provident Fund (EPF), which is currently offering 8.25% this year, is one of the preferred retirement planning vehicles owing to its favourable tax treatment — it provides a tax deduction at the investment stage and the returns are tax-free in your hands.

The Employees’ Provident Fund (EPF), which is currently offering 8.25% this year, is one of the preferred retirement planning vehicles owing to its favourable tax treatment — it provides a tax deduction at the investment stage and the returns are tax-free in your hands.

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Every year, usually at the beginning of the fiscal year, your company gives you an EPF slip. The slip indicates your contribution and interest accrued in your EPF account up to the previous year. For e.g., if you get the slip in say FY13, the entries in the slip will indicate your fund balance up to FY12. (We will take this example to illustrate the case.)

What does the account number stand for?

The number is alphanumeric. The first two entries indicate the regional PF office in which your company contributes your money. The next entry will be in digits. This will be the employer’s code, followed by the employee’s account number.

How to read your account balance

Your account balance will usually have the following entries.

Opening balance: This is the amount you have accumulated till the beginning of a financial year. This is divided into two heads — employee’s contribution and employer’s contribution.

Interest: This indicates the interest that has been credited to your account for FY12.

Contributions: This shows the payments made by you and your employer in FY12.

Withdrawals: Any partial withdrawals or advances that you may have taken.

Closing balance: This is the sum of all the entries.