Putting to rest confusion and speculation, the Supreme Court has upheld the Employees’ Pension (Amendment) Scheme, 2014, giving another opportunity to members of the Employees’ Provident Fund Organisation (EPFO) who had not opted for enhanced pension coverage prior to 2014 to jointly do so with their employers within the next four months.
Those employees who were existing EPS members as on September 1, 2014 can contribute up to 8.33 percent of their ‘actual’ salaries — as against 8.33 percent of the pensionable salary capped at Rs 15,000 a month — towards pension.
Read More: Why are Rs 2000 currency notes missing? Know details
The court has also struck down the requirement in the 2014 amendments mandating employee contribution of 1.16 percent of the salary exceeding Rs 15,000 per month.
The maximum pensionable salary for the purposes of calculating the pension is still Rs 15,000 per month as notified by the EPFO in 2014. This means that even if basic salary is higher than Rs 15,000 the employer’s contribution to pension will continue to be calculated on a basic salary of Rs 15,000.
The DC ruling has offered a one-time relief to employees who were members of the EPS as on September 1, 2014 and had been making a higher contribution to the EPS – i.e., contribution on their actual salary if it was higher than Rs 15,000 per month. These employees are now required to give a joint declaration, along with their employer, to the EPFO in order to continue making contributions on the higher amount. This declaration must be given within four months from the date of the judgment (November 4, 2022), which means on or before March 4, 2023. For employees making this declaration, the pension will be calculated on their higher salary (and not at the capped Rs 15,000 per month).
Read More: Reliance Jio 5G services now available in Hyderabad and Bengaluru, taking total cities to eight
The apex court held that the power to require members to make these additional contributions was not available under Section 6A of the EPF Act (under which the EPS was framed). However, it has kept this portion in abeyance for 6 months, so that the EPFO can understand how to obtain additional contributions to the pension fund in such a way that the fund is not depleted.
