According to a Supreme Court judgment, eligible employees can opt for higher pension from EPS within 4 months of the date of the judgment. The verdict came on November 4, 2022, which makes the last date for applying for higher EPS pension March 3, 2023. With less than 20 days to go, the Employees’ Provident Fund Organisation (EPFO) is yet to issue a circular regarding the process of opting for higher pension from EPS.
According to the Supreme Court judgment, there are two categories of employees who are eligible to apply for higher pension. The first category is of employees who were members of the EPS prior to September 1, 2014, had opted for higher pension from EPS, were already making contributions to EPS on basic salary exceeding the relevant limit but their request for higher pension was rejected by EPFO. The second category is of employees who were members of EPS as on September 1, 2014, but missed the opportunity to opt for higher pension from EPS by submitting the required application form.
The EPFO has issued a circular for the first category of employees on December 29, 2022, clarifying the eligibility conditions and the process of applying for the higher pension. It has also activated the link on the unified portal for this process. However, for the second category of employees, the EPFO is yet to issue a circular clarifying the process of filing applications.
ET Wealth reached out to experts to know why the EPFO has not issued a circular yet and what eligible employees can do with the deadline just around the corner.
Anshul Prakash, Partner, Employment Labour & Benefits, Khaitan & Co, says, “While it is difficult to comment on specific reasons for the absence of any circular with the required guidance, various employers have devised their own format of joint option or application form and are facilitating and endorsing such duly executed applications of its eligible and interested employees so that these can be submitted to the EPFO before the expiry of the deadline of March 3, 2023. It needs to be seen how the EPFO would respond to such applications.”
In August 2014, the EPFO issued a notification that raised the wage ceiling limit to Rs 15,000 from Rs 6,500. It also restricted employees from joining EPS if their basic salary at the time of joining EPF exceeds Rs 15,000. The notification also discontinued the option for existing members to apply for higher pension by making higher contributions.However, not many existing employees were aware of the existence of option to become eligible for higher pension by contributing higher part of wages toward EPS before September 1, 2014. Hence, they missed the less widely known opportunity to opt for higher pension. EPS members, who were aware of this option and whose applications for higher pension were rejected by the EPFO had gone to court to challenge the rejection.
Saraswathi Kasturirangan, Partner, Deloitte India, says, “The Supreme Court ruling provided an option to employees to choose higher contributions to pension on a retroactive basis. This option would be available to employees who have been EPS members as on September 1, 2014, as well as those who had retired from service prior to September 1, 2014, provided they had opted to contribute on higher wages, but the EPF authorities had rejected the same. The court had mandated the PF department to come out with guidelines for the latter category within 8 weeks of the judgment. However, there was no corresponding requirement for continuing employees, this could be due to the fact that the Supreme Court had mentioned that it was pronouncing its order under Article 142 of the Constitution that vests it with discretionary powers to issue decree or pass orders as necessary for doing complete justice. Such orders shall be enforceable throughout the country in the manner prescribed. The Supreme Court has provided a four-month window (till March 3, 2023) for members to opt for higher contribution to pension. Recently, the Madras High Court also held that ‘the employer need not wait for any circular from the provident fund department and the law declared by the apex court is the law of the land’. The court has further held that ‘the employer is bound to exercise the joint option along with the employees’ and the PF office has to act on such filings. Keeping this in mind, employers may need to enhance employee awareness on this topic and support them in the joint filings as the window for exercising the option for higher pension will be closed after March 3, 2023.”
Experts do not rule out the possibility of the deadline being extended. Dr PV Ramana Murthy, Head of Labour & Employment at law firm Economic Laws Practice, says, “We understand that in the meeting with EPF members held on February 10, 2023, the EPFO said they are working towards issuing a circular soon.” The EPFO has also conveyed to the members that it is hopeful of getting an extension so that every member can submit the option in time, says Murthy. “We opine that since the EPFO is actively working on this matter, the members may wait till the circular is issued,” he adds.