HC warns of contempt in pro-rata formula for higher pension case

The Himachal Pradesh High Court on Tuesday expressed dissatisfaction over the failure of the government authorities to comply with its earlier judgment on pension fixation, holding that the respondents were in contempt.

In the order, Justice Sandeep Sharma underlined that “Parliament has already prescribed the formula for determining pension (Pensionable Salary × Pensionable Service ÷ 70) where the pensionable salary is the average wage during the past 60 months of the contribution and the pensionable service is the actual period of the contributory service. Despite this, the Provident Fund Office calculated the pension of the petitioners on a pro-rata basis”.

The Bench observed that the petitioners belong to the Category 3 employees, having paid higher contributions, and therefore could not be subjected to a pro-rata formula. “The application of the pro-rata basis in their case is wholly unjustifiable,” the court stated.

Though convinced that the higher officer of the Employee Provident Fund Office were in contempt, the court refrained from passing any punitive order after the counsel for the Regional Provident Fund Commissioner sought time. The court allowed 10 days and directed strict compliance with its judgment, failing which officers must appear in person to explain why they should not be punished for willful disobedience.

The order carries significant implications for employees covered under the Employees’ Pension Scheme (EPS), 1995, particularly those who had contributed on higher wages. Thousands of pensioners across India have raised disputes over whether their pensions should be calculated on actual wages or capped contributions and whether the authorities concerned can apply the pro-rata formula. The matter has been posted for further hearing on September 23.