EPFO stops pension payouts to section of pensioners

Says their earlier application for higher pension wasn’t valid.

EPFO, provident fund
The EPFO is expected to provide a status report on the implementation. (IE)

Even as the Employees’ Provident Fund Organisation is implementing a higher pension option for its members, it has stopped making monthly pension payments to a section of its existing pensioners and served them with show cause notices that includes a demand to recover past “excess pension payments”.

These pensioners say the EPFO has stopped their pension from January 2023 without any notice and many are now looking at legal options to reinstate their pensions.

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Pensioners’ rights activist Parveen Kohli said he had exercised the joint option under Para 26(6) of the EPF Scheme, 1952 for higher pension during his service, which was also approved by the retirement fund manager and he had also deposited the differential amount at the rate of 8.33% on his actual salary from November 16, 1995 till his retirement for the higher pension.

“The EPFO has, however, cancelled my PPO for monthly pension of Rs 30,592 in January this year and has issued a new PPO where his pension would be Rs 2,372 per month. This is against my constitutional right and is a breach of trust,” he said.

Senior journalist Neelam Gupta, who retired in February 2013, has also been sent a similar show cause notice and her pension too has been stopped from January. “We were never asked to opt for a higher pension during our working period by either the EPFO or our employer. We had opted for higher pension following the RC Gupta case of 2016 when the Supreme Court said a cut off date cannot be there for higher pension. The EPFO had then allowed application for higher pension and I had applied for it and paid the differential amount,” she said.

The EPFO has stopped her higher pension of Rs 9,408 per month from January. “As per record, you had submitted your option after the date of retirement. Hence, you are not eligible for higher pension and your pension shall be restored to pension on wages up to the ceiling of Rs 5,000 or Rs 6,500 (as the case may be). Further, the recovery of excess pension amount shall be informed in due course,” said the EPFO’s notice.

EPFO officials said this follows a January 2023 circular where there was a decision to re-examine the old cases. “The pension in these cases has been completely stopped for now but in future, these people may get the earlier pension on a lower base,” said an official, adding that prior to 2014, the EPFO had not asked members to opt for higher pension. “How can these people have applied for higher pension then?” he asked.

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Significantly, the issue of implementation of higher pension following the Supreme Court ruling is expected to be part of the meeting of the Central Board of Trustees on Monday and Tuesday.

The EPFO is expected to provide a status report on the implementation and is likely to start an actuarial analysis and ascertain the financial implications on the scheme’s corpus and liabilities once fresh applications for higher pension have been verified. It has received nearly 94,000 applications from members who retired before September 1, 2014 and another about 30,000 applications under the joint option.

In a circular in January, the EPFO had directed field offices to reduce pension payouts to those who retired prior to September 2014, and were granted pension on higher wages without exercising such an option. The officers have been asked to recover the excess pension payments such retirees had received till date.

The communique followed the November 2022 Supreme Court ruling that upheld the EPS amendment of 2014. The EPFO had said the court’s verdict is only for those pensioners who had contributed towards the EPS on higher wages and jointly exercised the option with their employers for higher pension, which was denied or the extent of higher contribution was refunded or diverted to their EPF accounts.

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First published on: 27-03-2023 at 03:00 IST
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