As the Employees Provident Fund Organisation (EPFO) introduced changes in the Employees Pension Scheme (EPS) in follow up of the Supreme Court’s November 2022 order; EPF subscribers are now free to opt for a higher pension.
The pension for some eligible employees will stand to increase as EPS contribution of 8.33 percent would be calculated on the total salary and not on the ceiling of ₹15,000. Earlier this ceiling was ₹6,500.
It is important to note that the new rules will be applicable only to those EPF subscribers who joined the EPF scheme before September 1, 2014 and who are still working. Also, the employees who exercised the option when the rules were changed in Sep 2014 are not eligible to opt for the higher pension.
The latest EPFO circular effectively sets the Apex court’s November order in motion.
The circular that the EPFO issued on Feb 20, 2023 states that employees with their employers may submit joint option to the concerned regional office.
It is vital to note that the employees who earn more than ₹15,000 per month and who joined after Sept 1, 2014, are no longer entitled to employees’ pension scheme.
After the form is submitted
After the application forms are received before March 3, the regional PF commissioner will put up adequate notice on the board and banners for wider public information.
Each applicant will then be registered and digitally logged. The receipt number will be provided to the applicant.
The circular also states that the method of deposit and that of computation of pension will follow through a follow up circular from the EPFO.
In Sep 2014, the government had changed the EPF rules stating that 8.33 percent of the maximum salary of ₹15,000 would be calculated towards pension.
But the trade unions challenged that rule before the Supreme Court of India. On November 4, 2022, the court ordered that the new rule can be implemented for the employees joining after this date. The court had given 120 days to bring the rule into action. The deadline of 4 months expires on March 3, 2023.
But those who had joined before Sep 2014 were free to opt for the higher pension to be calculated at the rate of 8.33 percent of their full pay.