Supreme Court judgement on higher pension based on EPS-95 / Verdict on Employee’s Pension Scheme – 04th Nov’2022

There’s a lot of news last on Earlier judgements of the Supreme Court, Kerala High Court and Delhi High Court in October 2016, October 2018 and May 2019, respectively, moved towards restoring the option of higher/ uncapped pension. A review petition was also heard by the Supreme Court. Finally on November 4, 2022, a three Judge bench at the Supreme Court passed its judgment in the case of the Employees’ Provident Funds Organisation (EPFO) & ANR. etc. vs. Sunil Kumar B. & ORS etc. This judgement upholds the right of existing employees to opt for higher pension by contributing to EPS on higher/ uncapped salary.

Can anyone please help me understand in simple 2 points:

  1. Does this mean existing employees can opt for higher pension by contributing to EPS on higher/ uncapped salary?
  2. If yes, What are the expectations and actions from the employer?

Regards
Arsha

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Hi Arsha,

The judgment is applicable to those members of the provident fund who had given option to become members of pension scheme (para 11.3 of the pension scheme) prior to August 2014 and continue to be members after 01.09.2014 as well.

This judgement does not apply to the members of the pension scheme joined on or after 01.09.2014.

The court has struck down the requirement of making additional contribution of 1.16% by the members of the Pension Scheme who have contributed over and above Rs.15,000/- per month but this portion of the judgment is suspended for a period of 6 months to enable the EPFO to make adjustment in scheme as necessary.

Four months time line to exercise the option has been provided effective from the date of judgment.

With regard to any enhancement in the salary limit for coverage under the EPF Scheme, EPFO clarifies that employer and employee can exercise option to contribute to the pension fund on a salary exceeding the wage ceiling on two aspects, i.e.,

  • Immediately on from the date of commencement of the scheme i.e. 16.11.1995.
  • Immediately on and from the date the salary exceeded the statutory limit of Rs.6,500/- per month, the then prevailing wage limit.

The judgment does not impose any additional financial liability on the employers.

You may also refer to our update on this topic at - https://www.greythr.com/notifications/supreme-court-upholds-pension-amendment-scheme-2014/

Disclaimer: The above points are noted from Karnataka Employers’ Association’s presentation/webinar that discussed the implications of this judgment. Credit goes to KEA for simplifying and explaining the judgment.

Hope this helps.

Regards,
Bhuvana Anand

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Thank you @Bhuvana_Anand

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