EPFO seeks clarifications on SC ruling over hike in pension

Vijay C Roy

Tribune News Service

Chandigarh, April 26

Amid confusion over the implementation of the recent Supreme Court order regarding the payment of pension on actual contribution from salary, which would result in increase in pension, the regional office of Employees Provident Fund Organisation (EPFO) at Chandigarh has sought clarity on the subject from its Central office. Meanwhile, groups of pensioners are approaching the EPFO offices with inquiries related to the hike in pension.

The Supreme Court order gave scope for an employee to get pension according to his salary and not as capped earlier. According to the EPFO, the pension payable under Employee Pension Scheme (EPS) has been capped to a salary of Rs 15,000 since 2014. Prior to 2014, it was Rs 6,500. So under the new limit, the pension will be higher than the older limit.

Currently, 12% of employee’s salary is deducted as provident fund and an equal contribution is made by the employer. Out of the employer’s contribution, 8.33% is diverted to the EPS or pension scheme and the balance 3.67% goes to the provident fund. The pension fund is built up from the employer’s share.

Sources in the EPFO office said, “There are certain components which need to be explored before the implementation of the order. We are waiting for the directions from the Central office. In addition to this, we have certain queries regarding the applicability of the order and have raised our concerns to the Central office.”

On the confusion, the sources added, “Since the earlier pension was capped at a salary of Rs 6,500, the surplus contribution made by the employers has gone to the PF account. Now, we don’t have clarity on the issue whether the extra amount which went to the PF fund has to be transferred to the pension fund with interest or not? Also, if the employee has already withdrawn money from his PF account, then in that case what should be done? So we have raised our concerns and asked for clarifications.”

He said it is not clear whether the ruling will be applicable to the cases up to 2014 or also prior to that as the limit of Rs 6,500 mentioned in the communication was hiked to Rs 15,000 after that.

After the SC ruling, even if an employee has already withdrawn the PF after retirement, the surplus amount with interest can be deposited into the pension account. This will ensure a higher monthly pension.

The officials said it would be a voluntary option and a joint declaration will have to be signed by the employee and the employer in case the employee wishes to opt for pension under the new guidelines. Meanwhile, the regional office of EPFO is awaiting the software to make calculations under the new system.