SC opens 4-month window for eligible employees under EPS to opt for increased pension

Supreme Court
Supreme Court

New Delhi, Nov 6 (PTI): Eligible employees who had not opted for enhanced pension coverage prior to 2014 can jointly do so with their employers within the next four months after the Supreme Court upheld the Employees’ Pension (Amendment) Scheme, 2014.

Employees who were existing EPS members as on September 1, 2014 can 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 a month — towards pension.

The court on Friday struck down the requirement in the 2014 amendments mandating employee contribution of 1.16 per cent of the salary exceeding Rs 15,000 per month.

This will facilitate the subscribers to contribute higher to the scheme and get enhanced benefits accordingly.

Trade unions have demanded that the government call an extraordinary meeting of the central board of trustees of the retirement fund body EPFO for quick implementation of the apex court order.

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 towards provident fund corpus. At that point of time, maximum pensionable salary was Rs 5,000 per month which was later raised to Rs 6,500.

The EPS amendment of August 22, 2014 had raised the pensionable salary cap to Rs 15,000 a month from Rs 6,500 a month, and allowed members along with their employers to contribute 8.33 per cent on their actual salaries (if it exceeded the cap) towards the EPS. It gave all EPS members, as on September 1, 2014, six months to opt for the amended scheme.

The amendment, however, required such members to contribute an additional 1.16 per cent of their salary exceeding Rs 15,000 a month towards the pension fund.

While not too many employees had opted to contribute based on their actual salaries, the Supreme Court order means that EPFO members and employers now have four months to opt for a pension scheme linked to actual salaries.

This would essentially imply higher annuity after retirement.

Talking to PTI, General Secretary, Hind Mazdoor Sabha, Harbhajan Singh Sidhu said, ”The apex court has given relief to subscribers of the Employees’ Provident Fund Organisation (EPFO) to opt for pension on higher earnings. Now we demand from the government to immediately call a special meeting of Central Board of Trustees (CBT) headed by the Union Labour Minister to discuss the order in detail and implement the relief given to members.” The apex court also held that the EPFO cannot ask subscribers for an additional 1.16 per cent of contribution of salary for opting pension on higher earnings without amending the existing law.

The court has given the option of pension on higher earnings to subscribers of exempted provident fund trusts also.

Another EPFO trustee and All India Vice-President of Bharatiya Mazdoor Sangh (BMS) Sunkari Mallesham also demanded an extraordinary meeting of the CBT.

”There is a need to call an extraordinarily meeting of the CBT to discuss the order thoroughly and provide relief given to members,” Mallesham told PTI.

The apex court stated: ”Time to exercise option under paragraph 11(4) of the scheme, under these circumstances, shall stand extended by a further period of four months. We are giving this direction in exercise of our jurisdiction under Article 142 of the Constitution of India.” Paragraph 11 (4) of EPS-95 provides for members to opt for pension on higher earnings.

The window to opt for contribution on higher earning was open to subscribers for six months from September 1, 2014. The amendment in 2014 had also provided that these members have to contribute at the rate of 1.16 per cent on salary exceeding Rs 15,000 per month.

For the amount up to Rs 15,000 basic wages, the contribution of 1.16 per cent towards EPS is provided by the central government.

”The requirement of the members to contribute at the rate of 1.16 per cent of their salary to the extent such salary exceeds Rs 15,000 per month as an additional contribution under the amended scheme is held to be ultra vires the provisions of the 1952 Act,” the Supreme Court held.

However, the apex court suspended operation of this part of its order for six months to enable the authorities to make adjustments in the scheme so that the additional contribution can be generated from some other legitimate source within the scope of the Act, which could include enhancing the rate of contribution of the employers.

For the six months or till such time any amendment is made, whichever is earlier, the employees’ contribution shall be as a stop gap measure and the said sum shall be adjustable on the basis of alteration to the scheme that may be made, it stated.

BMS activist and an EPFO trustee Prabhakar Banasure also opined that there should be a meeting of CBT.

”My demand is that minimum pension should be Rs 5,000 per month. Also, pensioners should be covered by Aayushaman Bharat scheme,” he said.

The judgement, however, does not appear to be affecting employers or the industry at present as per the employers’ representatives.

K E Raghunathan, a CBT member representing employers, told PTI: ”Supreme Court suggests that employers’ contribution to pension can be increased as a possible solution. This could be a cause of concern as employers’ burden may increase.

This, anyway, would require amendment to the Act, if the government so decides. Even then there will be no additional liability on employer. Only inter-se allocation of contribution between PF and pension will change.”

Senior advocate Jayanth Muthuraj, who argued in favour of employees, said, ”We can say this judgement broadly deals with three major points — all the employees who did not exercise the option for 2014 scheme but were entitled to do so were given a chance to opt for the scheme in four months’ time.

Secondly, the court struck down a requirement for the employee to contribute 1.16 per cent of the salary, if their salary exceeds Rs 15,000 per month, and thirdly, employees who were not in service as on September 1, 2014 and had not opted for the scheme would not be entitled for the benefit of the judgement.”

Muthuraj said that in his view and reading of the verdict the direction (v) of the judgement which disentitles the employees who retired prior to September 1, 2014 without exercising the option is contrary to RC Gupta verdict (2016 judgement) which has been approved by the top court.

Advocate Varinder Kumar Sharma, who argued on behalf of Pradeshik Cooperative Dairy Federation of Lucknow, said that the verdict is a mixed bag.

”In RC Gupta case of 2016, the top court has said that if the employee who has retired prior to September 1, 2014 without exercising the option then he is eligible for 2014 scheme as there is no cut-off date and if he returns all such amounts that he may have taken or withdrawn from the provident fund account.

This was a big problem as a person who has retired in 2010 or 2012 and has taken all his retiral benefits was also seeking pension as per RC Gupta verdict,” he said.

Advocate P S Sudheer, who also appeared for the employers, said: ”Employers will be benefited with the direction that people who have retired prior to September 1, 2014 without exercising the option under the 1995 scheme will not be entitled for 2014 scheme,” he said.


Disclaimer :- This story has not been edited by The Sen Times staff and is auto-generated from news agency feeds.
Source: PTI