Govt may file review plea on SC ruling on pension scheme | The Financial Express

Govt may file review plea on SC ruling on pension scheme

Ministry of labour, EPFO in discussions with actuary

pension fund, pension scheme, EPF scheme, EPFO, EPS amendment,
Implementation of the SC ruling would lead to higher outgo for the retirement fund body in terms of higher PF and pension pay-out.

The ministry of labour and employment is reviewing the ruling of the Supreme Court on the Employees’ Pension (Amendment) Scheme, 2014 and could file a special leave petition. “The government is studying the judgement and reviewing all options. It is considering the possibility of filing a special leave petition as there is a view that at least some parts of the ruling may be difficult to implement given the higher liability,” said two sources familiar with the development.

A decision would be taken after discussions at the highest level, they added.

Implementation of the SC ruling would lead to higher outgo for the retirement fund body in terms of higher PF and pension pay-out.

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The Ministry and the Employees’ Provident Fund Organisation are understood to be in talks with the actuary for the scheme to evaluate the additional liability for the higher pension.

An email questionnaire by FE to the ministry did not elicit a response.

In its ruling in November this year, the EPS amendment of 2014 was upheld by the Supreme Court in so far as it limited the eligibility of employees to become members to wage ceiling of Rs 15,000 per month. The ruling also opened a four-month window for eligible employees who had not opted for the higher pension coverage before 2014 to jointly do so with their employers.

The apex court also struck down the requirement in the 2014 amendments that mandated employee contribution of 1.16% of the salary exceeding Rs 15,000 per month.

Accordingly, employees who were existing EPS members as on September 1, 2014 can contribute up to 8.33% of their ‘actual’ salaries — as against 8.33% of the capped salary — towards pension. However, this part of the order has been suspended for six months during which time the legislature may bring in amendments to generate additional source of funds to the EPS Scheme.

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The government has till now not spoken on the issue though officials have indicated that the judgement by the apex court is under examination.

Trade unions have sought a meeting of the Central Board of the EPFO at the earliest to implement the decision.

Recently, the All India EPF Staff Federation too had written to the Central PF Commissioner seeking clarity on details of the scheme and had said field formations were finding it difficult to respond to queries from subscribers and pensioners.

Experts said the lack of clarity is also causing confusion for companies and employers.

“The principal concern is the lack of any guidance from the EPF department on the manner of seeking declaration by employees who wish to contribute higher pension. This has kept the industry in a fix amidst hope of clarification from the authorities and avoid potential HR issues,” said Anshul Prakash, Partner, Employment Labour and Benefits, Khaitan & Co.

The EPS amendment of 2014 had hiked the pensionable salary with a cap of Rs 15,000 per month from Rs 6,500 per month. Employers and members had to contribute 8.33% of the actual salaries towards the scheme, if it exceeded the cap. All EPS members, as on September 1, 20154 were given a six-month window to opt for the amended scheme. Further, employees were required to contribute at the rate of 1.16% of the monthly salary exceeding Rs 15,000 towards the pension fund.

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First published on: 22-12-2022 at 00:30 IST
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