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Wednesday, February 15, 2023

Increased EPS pension delayed when you didn’t retire earlier than Sep 2014

Many organisations a part of the EPFO are abuzz with discussions and calculations on larger EPS pensions following the Supreme Court docket’s verdict. Many have even supplied deadlines to workers at the moment in service to go for a better EPS pension by transferring a good portion of their EPF corpus to the EPS. Nevertheless, on the time of writing, the EPFO has opened its doorways to solely a small part of eligible workers to go for a better EPS pension.

On Dec twenty ninth 2022, the EPFO launched the primary round on the matter. It solely referred to the next phase of workers.

Para 44 (vi) of the judgement: “The workers who’ve retired earlier than 1st September 2014 upon exercising possibility underneath paragraph 11(3) of the 1995 scheme shall be coated by the provisions of paragraph 11(3) of the pension scheme because it stood previous to the modification of 2014”.

11(3) of the EPS 1995 scheme earlier than modification reads: “If on the possibility of employer and worker, 8.33% of the employer’s contribution on precise wage (larger than Rs 6500) is remitted into the pension fund, such larger wage shall be thought-about as pensionable wage”.

Staff who’ve retired earlier than 1st September 2014 are eligible for larger EPS pension if:

a) as workers, that they had contributed on wage exceeding the then prevalent wage ceiling of Rs 5,000 or Rs 6,500; and
b) Exercised joint possibility underneath the Staff’ Pension Scheme (EPS) of the pre-amendment scheme whereas being members of EPS-95, and
c) The EPFO declined their train of such an possibility.

What about workers at the moment in service?

This extract of the Supreme Court docket’s judgement makes this clear:

44(iv) The members of the scheme, who didn’t train possibility, as contemplated within the proviso to paragraph 11(3) of the pension scheme (because it was earlier than the 2014 Modification) can be entitled to train possibility underneath paragraph 11(4) of the submit modification scheme.”

“Their proper to train possibility earlier than 1st September 2014 stands crystalised within the judgment of this Court docket within the case of R.C. Gupta (supra). The scheme because it stood earlier than 1st September 2014 didn’t present for any reduce­off date and thus these members shall be entitled to train possibility by way of paragraph 11(4) of the scheme, because it stands at current.”

“Their train of possibility shall be within the nature of joint choices overlaying pre­amended paragraph 11(3) as additionally the amended paragraph 11(4) of the pension scheme. There was uncertainty as regards validity of the submit modification scheme, which was quashed by the aforesaid judgments of the three Excessive Courts.”

“Thus, all the staff who didn’t train possibility however have been entitled to take action however couldn’t as a result of interpretation on reduce­off date by the authorities, should be given an extra probability to train their possibility. Time to train possibility underneath paragraph 11(4) of the scheme, underneath these circumstances, shall stand prolonged by an extra interval of 4 months. We’re giving this route in train of our jurisdiction underneath Article 142 of the Structure of India.”

Para 11(4) of the modification says recent possibility be exercised collectively by the employer and worker for persevering with contribution on precise wage.

So workers who have been in service as of Sep 1st 2014, also needs to be eligible for larger pension. This contains workers who’ve since retired or are at the moment in service.

Nevertheless, not one of the EPFO circulars on EPS pension refers to this phase (as per 44(iv) of the decision) on the time of writing this text (18:15, 14th Feb 2023).

Due to this fact, all EPFO subscribers nonetheless in service or those that retired after 1st Sep 2014 are usually not but eligible for larger EPS pension – it will likely be delayed.

Does the EPFO have the monetary functionality to dole out larger pensions to this phase of subscribers? The promptness with which the EPFO credit curiosity annually within the current previous ought to supply a clue! I gained’t be inserting any bets in favour of the EPFO.

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