EPFO prepares to accept more requests for pension hike after SC ruling
By Sunil Dhawan
In what appears to be a good sign for Employees’ Pension Scheme (EPS) members, the Employees’ Provident Fund Organisation (EPFO) is getting ready to process more requests for a hike in pension after it was forced to do the same for 12 petitioners following a Supreme Court order.
A landmark Supreme Court order of October 2016 directed the EPFO to revise the pension of the petitioners under EPS.
Expecting other pensioners to put in similar requests citing this judgment, the EPFO has given directions to its regional offices on how these requests are to be handled.
Following the SC order, it is expected that even other employees (who are members of the EPS) would soon start approaching EPFO to retrospectively enhance their contribution on higher salary in order to get a quantum jump in their pension. In order to do so, the employees would have to route applications through their employers. In the meantime, EPFO seems to have geared up their machinery to meet the onslaught from several pensioners.
How the EPFO is getting ready
In June 2017, EPFO circulated an internal circular to their regional offices asking them to keep a track of the pensioners whose pension pay orders (PPO) have been revised. “All offices are also required to forward a monthly return with respect to the payments made to pensioners on the actual (higher wages)”, in a specific format, said the circular.
The details required to be captured are: Member’s name, date of retirement, amount of contribution and the interest to be paid back by the member, old and the new pension, and pension arrears to be paid by the pensioner.
What employees need to do
To be eligible for higher pension, the individual has to payback a certain amount to the EPFO. If the contribution to the EPS account is increased with retrospective effect to give pension on full salary, a commensurate amount needs to be transferred from the individual’s EPF account to the EPS account. Further, the interest earned by the money for the period it remained with EPF should also go to EPS. There should not be any gridlock even if such transfers are to be made from an exempted organisation to the EPFO, provided guidelines are put in place.
In March 1996, the EPS Act was amended to allow members to raise pension contribution to 8.33 percent of full salary (basic + dearness allowance) irrespective of what the salary is. However, for a decade not many people opted for higher contribution.
In 2005, following media reports, including Times of India , several private EPF fund trustees and employees approached EPFO with the demand to remove the ceiling on their EPS contributions and raise it to their total salary. The EPFO rejected the demand claiming that their response should have come within six months of the 1996 amendment. In October 2016 Supreme Court ruled in favour of employees’ right to raise their contributions to the pension fund without imposing any cut-off date for eligibility.
In September 2014, the pensionable salary limit was raised from Rs 6,500 to Rs 15,000, and existing employees who were contributing on full salary were asked to furnish a fresh option within 6-12 months. Simultaneously, EPFO stopped contributions on full salary from thereon.
In March 2017, the EPFO came out with a circular allowing member of EPS who had contributed on higher wages exceeding Rs 6,500 to divert 8.33 percent of salary exceeding Rs 6,500 to the pension fund, and subsequently be eligible for pension on higher salary.
Meanwhile, the EPFO issued an internal circular stating that they have filed a transfer petition with the apex court to transfer all the writ petitions filed in various high courts to the Supreme Court for deciding the subject matter pertaining to the employees of exempted organisations. Click hereto the full story.
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Via:: Economic times – Wealth