Giving a chance to employees to opt for a higher pension just a fortnight before the end of the 4-month deadline by the Supreme Court, the Employees’ Provident Fund Organisation (EPFO) has issued a fresh set of instructions for employees who had not opted for pension contributions at a higher wage than wage ceiling and continued to be in service on or after September 1, 2014.
In a circular dated February 20, the EPFO in a set of instructions to its field officers said joint option (by employees and employers) for higher pension contribution can be exercised by: one, the employees and employers who had contributed on salary exceeding the prevalent wage ceiling of Rs 5,000 or 6,500; two, did not exercise joint option under the proviso to Para 11(3) of the pre-amendment scheme (since deleted) while being members of EPS 95; and three, were members prior to 01.09.2014 and continued to be a member on or after 01.09.2014.
EPF instructions for serving employees
The instructions issued Monday stated that in compliance with the Supreme Court judgment, employees with their employers can exercise a joint option for higher pension contributions. An online facility will be provided for employees who continued to be a subscriber of EPS on or before 01.09.2014, details of which will be informed shortly. “Once received, the Regional PF Commissioner shall put up adequate notice on the notice board and banners for wider public information,” the circular said.
In case of transfer of funds from exempted provident fund trust to the pension fund of EPFO, an undertaking of the trustee shall be submitted. “In case of employees of unexempted establishments, refund of requisite employer’s share of contribution, the same shall be deposited with interest at the rate declared under Para 60 of EPF Scheme. 1952, till the date of actual refund,” it said, adding that the method of deposit and that of computation of pension will follow through a subsequent circular.
Earlier circulars issued by EPFO
Last month, EPFO issued instructions for re-examination of cases of employees who drew higher pension based on actual wage and retired prior to September 2014 but had not opted for pension linked to higher wage with the retirement fund body.
That circular had specified that “in order to stop over payment, if any, in respect of employees who had retired prior to 1st September 2014 without exercising any option under Para 11(3) or the pre-amended scheme, and have been granted pension on higher wages, their cases need to be re-examined to ensure that they are not given higher pension from the month of January 2023 onwards”. “Pension in such cases may be immediately restored to pension on wages up to the ceiling of Rs. 5000 or Rs 6500,” it said.
November judgement on EPF pension by Supreme Court
On November 4, the SC upheld the Employees’ Pension (Amendment) Scheme, 2014, allowing another opportunity to EPF members who have availed of the EPS, to opt for higher annuity over the next four months. Employees who were existing EPS members as on September 1, 2014 were given another chance to contribute up to 8.33 per cent of their ‘actual’ salaries — as against 8.33 per cent of the pensionable salary capped at Rs 15,000 every month — towards pension.
The court agreed with the changes. It said, “We do not find any flaw in altering the basis of computation of pensionable salary.”
The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 originally did not provide for any pension scheme. In 1995, through an amendment, a scheme was formulated for employees’ pension, wherein the pension fund was to comprise a deposit of 8.33 per cent of the employers’ contribution to be made towards the provident fund corpus. At that time, the maximum pensionable salary was Rs 5,000 per month, which was later raised to Rs 6,500.
The EPS, which is administered by the EPFO, aims to provide employees with pension after the age of 58. Both the employee and the employer contribute 12 per cent of the employee’s basic salary and dearness allowance to the EPF. The employee’s entire part goes to EPF, while the 12 per cent contribution made by the employer is split as 3.67 per cent contribution to EPF and 8.33 per cent contribution to EPS. Apart from this, the Government of India contributes 1.16 per cent as well for an employee’s pension. Employees do not contribute to the pension scheme.
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