Key Updates About EPFO : Over 20,000 Members To Receive Higher Pensions

As of January 28, the Employees' Provident Fund Organisation (EPFO) has issued 21,885 Pension Payment Orders (PPO) and asked 1.65 eligible members to make additional deposits in order to qualify for higher pensions, as per Minister of State for Labour & Employment Shobha Karandlaje.

The Minister shared the statistics in the Parliament while noting that a total of 17,48,768 lakh applications were submitted by EPFO members seeking higher pension benefits under the Employees' Pension Scheme 1995 (EPS-95).

Further, Karandlaje assured that the government is monitoring the pending applications and has asked EPFO Field offices to fasten the administrative process.

The information comes as the department is following the Supreme Court's ruling on November 4, 2022, regarding the contribution of existing members in the EPS.

What Is Employees' Pension Scheme ?

It is a social security scheme under the Employees' Provident Fund Organisation, primarily focusing on providing pensions to the employees of the organized sector after their retirement at the age of 58.

Introduced in 1995, the scheme invites a contribution from both employees and employers, where each contribution amounts to 12 per cent of the employee's basic pay and dearness allowance towards Employees' Provident Fund (EPF). The employee's entire share of 12 per cent is directly contributed to EPF, whereas 8.33 per cent of the employer's share goes to EPS and the remaining share is contributed towards EPF every month.

Maximum Cap On Employees' Pension Scheme

In 1995, the maximum cap on a monthly pension was Rs 5,000, which means that the employer's maximum contribution of 8.33 per cent was Rs 5,000 per month. It was later revised to Rs 6,500 per month.

In 1996, the government brought some changes and introduced an option to contribute 8.33 per cent of the employee's actual salary. The EPFO gave a time limit of six months to the employees to shift to a higher pension option.

Notably, the government amended the EPS scheme in 2014, capping the higher pensionable salary to Rs 15,000, and omitting the option to contribute to EPS on a higher salary. These amendments target those who joined the scheme after September 1, 2014.
However, the employees who were a part of the EPS scheme or joined before September 1, 2014, and filed an option to shift to a higher pension option before February 28, 2015, could continue contributing 8.33 per cent of their actual salary in the EPS.

Supreme Court Ruling In November 2022

The 2014 amendments drew severe criticisms from the EPS members with many claiming that they were unaware of the joint option to file for pension on higher salary. As a result, their pension was calculated on a salary of Rs 15,000, even though their contributions were based on significantly higher actual salaries. Additionally, several joint option applications were rejected by the EPFO, further fueling dissatisfaction among the members.

The matter was taken to several courts. The judgements from the Supreme Court, Kerala High Court, and Delhi High Court all favoured towards restoration of pension calculation based on actual salary.

On November 2002, a final judgement was ruled by Supreme Court, allowing employees who were part of EPS before September 1, 2014 but were unaware of the joint option to exercise it within May 3, 2023. The date was later extended to July 11, 2023.