However, with the deadline fast approaching, there are still certain issues regarding which clarity has to be provided by the EPFO. For instance, the retirement fund body still needs to clarify regarding the replacement mechanism for the additional 1.16% EPS contribution by employees which was struck down by the Supreme Court, how pension will be computed, how additional dues that an individual needs to pay will be calculated, implementation of the Kerala High Court which has asked EPFO not to stress on the requirement of documents proof to apply for higher EPS pension.
As these issues need clarification from the EPFO, many eligible employees are hoping that the deadline to apply for higher EPS pension will be extended. ET Wealth Online reached out experts to see if there is a need for the extension to apply for higher pension from EPS. Here is what they had to say.
Puneet Gupta, Partner, People Advisory Services, EY India: “The EPFO activated the online facility for members to submit the joint option application on February 27, 2023, with a deadline of May 3, 2023, for the submission of applications. While the due date is fast approaching, the EPFO is yet to clarify some aspects – such as the manner of computation of pension and method/timeline for re-deposit of accumulations withdrawn by members if any. These are critical aspects for members in their decision-making process. Also, there are added complications for employers as they are required to submit wage details of employees for the entire period of employment while approving the application. Gathering such historical data is likely to pose practical challenges for employers and would be a time-consuming process. Given these challenges, the EPFO may further extend the deadline and provide clarity on these practical issues.”
Sowmya Kumar, Partner, IndusLaw: In my view, it’s a 50-50 chance that the EPFO will extend the deadline. There are a lot of operational issues that the EPFO is no doubt working on; however, it’s possible that extending the deadline could only result in the issues being postponed to a later date rather than fully resolved. It is imperative that the EPFO provides complete clarity on how employees can avail the higher pension option, rather than issuing circulars on a piecemeal basis.
Saraswathi Kasturirangan, Partner, Deloitte India: EPFO issued notifications on December 29, 2022, and February 20, 2023, clarifying the eligibility, process flow, documents/declarations to be submitted. EPFO issued another notification on April 23, 2023, mentioning the time which will be allowed to seek further information if application is missing any details. However, a lack of clarity on following aspects has got many members sitting on the fence: a) Clarity on pension calculation formula, b) Timelines to deposit the shortfall in amount where members have withdrawn PF balances, c) Manner in which shortfall needs to be deposited – especially where members are no longer in employment, d) Approach for members who are unable to trace any proof of higher PF contributions – whether a self-declaration can be filed, or they will be deprived of benefit to contribute higher pension merely because a documentary proof is not available A clarification on these points from EPFO will be welcome. EPFO may not consider an extension of due date since it has already been extended once, therefore, members should ensure to file an application by May 3rd if they prefer to opt for a higher pension.
Sanket Jain, Partner, Pioneer Legal: With the muddle of submissions vide the online portal and physical submissions to field offices and unavailability of proper guidelines as directed vide the Kerala High Court Interim order, it seems that the employees will have to bite the bullet and keep attempting to apply for their higher pension scheme while simultaneously awaiting further instructions and extension of the timeline from the authorities.Utsav Trivedi, Partner, TAS Law: The extension of deadline to apply for higher pension under EPS has already been extended by the Employees Provident Fund Organisation (EPFO) to May 3, 2023, from the earlier date of March 3, 2023 -which was the last date as per the Supreme Court’s verdict. EPFO are yet to provide their clarification on 1.16% of the contribution from the basic salary provided by the employees having salary of Rs. 15,000. This clarification may change the dynamics as the Supreme Court vide its judgment dated November 4, 2022, declared the 1.16% of the contribution as invalid and observed that the requirement of the members to contribute at the rate of 1.16% of their salary to the extent such salary exceeds Rs.15000/ per month as an additional contribution under the amended scheme to be ultra vires the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act. Further, the Apex Court had already provided 6 months of timeline to the EPFO to make adjustments in the scheme so that the additional contribution can be generated from some other legitimate source within the scope of the Act, which could include enhancing the rate of contribution of the employers. However, till date there are no clarification from the EPFO regarding the same and there could be a possibility that the deadline may be extended further to enable more clarity and such extension would rather be beneficial for EPFO otherwise it may seem them to be flouting the order of the Apex Court of the country.