Higher pension not applicable to exempted firms, says EPFO

CHANDIGARH: Retirement fund body Employees’ Provident Fund Organisation (EPFO) has clarified that higher pension under the Employees’ Pension Scheme 1995 is currently applicable only to organisations whose provident funds are managed by the EPFO and not for the exempted organisations where the provident funds are managed by trusts.

Vijay C Roy

Tribune News Service

Chandigarh, December 13

Retirement fund body Employees’ Provident Fund Organisation (EPFO) has clarified that higher pension under the Employees’ Pension Scheme 1995 is currently applicable only to organisations whose provident funds are managed by the EPFO and not for the exempted organisations where the provident funds are managed by trusts. Accordingly, employees of six exempted trusts in Chandigarh, Punjab and Himachal Pradesh won’t be eligible to derive the benefits currently.

Senior officials in the EPFO said at present the Supreme Court ruling is applicable only to ‘not exempted’ organisations. “The matter is also sub judice, so we won’t be able to comment much on the matter,” said a senior EPFO official.

Earlier, a Supreme Court order had given scope for an employee to get higher pension according to his salary. It says in case contribution towards EPS is made on a salary over and above the upper limit of Rs 6,500 then even pension can be received on higher amount.

Any employee who completes 10 years of service is eligible to get pension. The members of EPS-95 who have retired are eligible to derive the benefits.

Under EPS 1995, employers and employees contribute 12% each of the sum that is the total of the basic wage plus dearness allowance to the employee’s provident fund account. The employer’s contribution has a twin component: 8.33% goes to the Employee Pension Scheme and the remaining 3.67% goes to the provident fund account. This was originally subject to a salary ceiling of Rs 5,000. The ceiling was revised to Rs 6,500 in 2001 and further to Rs 15,000 in 2014. Since the earlier pension was capped at a salary of Rs Rs 5,000 and Rs 6,500 respectively, the surplus contribution made by the employers has gone to the PF account. After the SC ruling, even if an employee has already withdrawn his PF after retirement, the surplus amount with interest can be deposited into the pension account. This will ensure a higher monthly pension.

According to the official, a member whose employer had contributed on higher wages in pension account which was transferred to provident fund account or where employer contributed on full wages while restricting contribution in pension fund to wage ceiling and contributed the rest to provident fund account may remit the difference in amount between 8.33% of the actual wages and 8.33% of the statutory wage ceiling with up to date interest to derive the benefits.