A landmark Supreme Court order
of October 2016 directed the EPFO to revise the pension of the petitioners
under EPS.
Expecting other pensioners to
put in similar requests citing this judgment, the EPFO has given directions to
its regional offices on how these requests are to be handled.
Following the SC order, it is
expected that even other employees (who are members of the EPS) would soon
start approaching EPFO to retrospectively enhance their contribution on higher
salary in order to get a quantum jump in their pension. In order to do so, the
employees would have to route applications through their employers. In the meantime,
EPFO seems to have geared up their machinery to meet the onslaught from several
pensioners.
How the EPFO is getting ready
In June 2017, EPFO circulated
an internal circular to their regional offices asking them to keep a track of
the pensioners whose pension pay orders (PPO) have been revised. "All
offices are also required to forward a monthly return with respect to the
payments made to pensioners on the actual (higher wages)", in a specific
format, said the circular.
The details required to be
captured are: Member's name, date of retirement, amount of contribution and the
interest to be paid back by the member, old and the new pension, and pension
arrears to be paid by the pensioner.
What employees need to do
To be eligible for higher
pension, the individual has to payback a certain amount to the EPFO. If the
contribution to the EPS account is increased with retrospective effect to give
pension on full salary, a commensurate amount needs to be transferred from the
individual's EPF account to the EPS account. Further, the interest earned by
the money for the period it remained with EPF should also go to EPS. There
should not be any gridlock even if such transfers are to be made from an
exempted organisation to the EPFO, provided guidelines are put in place.
The background
In March 1996, the EPS Act was
amended to allow members to raise pension contribution to 8.33 percent of full
salary (basic + dearness allowance) irrespective of what the salary is.
However, for a decade not many people opted for higher contribution.
In 2005, following media
reports, including Times of India , several private EPF fund trustees and
employees approached EPFO with the demand to remove the ceiling on their EPS
contributions and raise it to their total salary. The EPFO rejected the demand
claiming that their response should have come within six months of the 1996
amendment. In October 2016 Supreme Court ruled in favour of employees' right to
raise their contributions to the pension fund without imposing any cut-off date
for eligibility.
In September 2014, the
pensionable salary limit was raised from Rs 6,500 to Rs 15,000, and existing
employees who were contributing on full salary were asked to furnish a fresh
option within 6-12 months. Simultaneously, EPFO stopped contributions on full
salary from thereon.
In March 2017, the EPFO came
out with a circular allowing member of EPS who had contributed on higher wages
exceeding Rs 6,500 to divert 8.33 percent of salary exceeding Rs 6,500 to the
pension fund, and subsequently be eligible for pension on higher salary.
Meanwhile, the EPFO issued an
internal circular stating that they have filed a transfer petition with the
apex court to transfer all the writ petitions filed in various high courts to
the Supreme Court for deciding the subject matter pertaining to the employees
of exempted organisations.