The Employees’ Provident Fund Organisation (EPFO) Monday extended the deadline to opt for a higher pension to May 3. “The joint option for employees who were in service prior to September 1, 2014 and continued to be in service on or after 01.09.2014 but could not exercise joint option under the Employees’ Pension Scheme can do so now on or before May 3, 2023,” the EPFO said on its website in a message.
This comes after the EPFO on February 20 released a set of instructions to its zonal offices to allow a section of its older members to opt for higher pensions under the Employees’ Pension Scheme (EPS).
The Supreme Court in a ruling on November 4 upheld the amendments to the Employees’ Pension (Amendment) Scheme, 2014, implying another chance for employees who were existing EPS members as on September 1, 2014, to contribute up to 8.33 per cent of their ‘actual’ salaries — as against 8.33 per cent of the pensionable salary capped at Rs 15,000 a month — towards pension.
The apex court in its ruling allowed a four-month window to enable opting for higher pensions for EPS subscribers, the deadline of which came to around March 3, 2023.
At present, both employees and employers contribute 12 per cent of the employee’s basic salary, dearness allowance and retaining allowance, if any, to the EPF. The employee’s entire contribution goes to EPF, while the 12 per cent contribution by the employer is split as 3.67 per cent to EPF and 8.33 per cent to EPS.
The Government of India contributes 1.16 per cent to an employee’s pension, while employees do not contribute to the pension scheme.
The EPS provides employees with a pension after the age of 58, if they have rendered at least 10 years of service and retired at age 58. If a member leaves employment between ages 50 and 57, they can avail early (reduced) pension.
The monthly pension of EPS members is computed as: pensionable salary x pensionable service/70. This is based on a pro-rata basis linked to maximum monthly pensionable salary of Rs 6,500 for pensionable service up to September 1, 2014, and Rs 15,000 thereafter.
The amendments of August 22, 2014, raised the pensionable salary cap to Rs 15,000 a month from Rs 6,500, and allowed members along with their employers to contribute 8.33 per cent on their actual salaries (if it exceeded the cap) towards EPS. It gave all EPS members as on September 1, 2014, six months to opt for the amended scheme, extendable by another six months at the discretion of the Regional Provident Fund Commissioner.
Members, who opted for pensions linked to actual salaries exceeding the wage ceiling, were required to contribute an additional 1.16 per cent of their salary toward the pension fund.
The operation of the amendment requiring members to make the 1.16 per cent contribution was suspended by the SC for six months and more clarity is awaited on it from the EPFO.
