Hr NewsStatutory Compliance

Hoping for higher pension from EPFO after SC judgement? Uncertainty prevails

Source | : By Sunil Dhawan

Following Supreme Court’s judgment enabling 12 petitioners to get a higher pension from EPFO, other working individuals and even pensioners are all asking the same question: Will they also be eligible for a higher pension provided they start contributing on full salary, or in case of retired employees, make a lump sum payment equivalent to unpaid contributions to the Employees’ Provident Fund Organisation (EPFO)? There appears to be no clarity on this.

In fact, if most, except for a small category of people, were to approach the EPFO right now they are unlikely to be able to make much headway.

Who are these ‘small category’? Those who had earlier (during working years) contributed to the EPS (a fixed percentage of 8.33%) on the basis of their full salary instead of on the basis of Rs 6500. Rs 6500 was the maximum pensionable salary fixed by the government at that time for the purposes of contribution to EPS.

According to EPFO sources, the organisation is not accepting fresh monthly contributions which were due earlier (which means that EPFO would not accept retrospective contributions on full salary). They cited August 29, 2014, circular, wherein the EPS rules were changed effective September 1, 2014, to increase the wage limit from Rs 6,500 to Rs 15,000 per month.

Here, the contributors were asked to provide a fresh option to continue contributing on full salary instead of the cap of Rs 15,000 (which is applicable at present) within six months, which was later extended to 12 months. In case such a fresh option was not exercised by the contributor, then the contribution to EPS above the wage ceiling was to be diverted to EPF.

The sources said that EPFO is only considering ‘reclassifying’ the EPS accounts and that too not for all. It is learnt that they propose to do this re-classification as follows: The revision in the pension can be only for those pensioners who retired before 2014 from unexempted organisations, provided they had contributed on full salary.

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