Can New Employees Join the Pension Scheme After September 2014? Seeking Clarity on PF Rules

Kindly help me clarify these doubts. Whether an employee who joins PF on or after 1st September can become a member of the pension scheme, or would the whole 12% EMPLOYER CONTRIBUTION go to PF? If there is any change in rules (for employees joining on or after September 2014), then is it applicable for both categories, one with a salary under Rs. 15,000/- and the other exceeding Rs. 15,000/-?

Regards,

Regarding Salary Up to Rs. 15,000/-

It is statutory to contribute to EPF. 8.33% of the employer's contribution will be remitted to the Pension Scheme. The balance share from the employer's side and the full share from the employee's side will be credited to the PF account.

Regarding Salary Above Rs. 15,000/-

It is not statutory to contribute to EPF. However, if the employee and employer wish, both the employee's and employer's shares can be credited to the PF account. But there will not be any contribution to the Pension Fund.

Regards,
Abbas.P.S

Just to be clear, if an employee has a salary above ₹15,000 (basic + DA) and is not an exempt employee, then their deduction will be the same as that of an employee with a salary of ₹15,000. So, 8.33% of ₹15,000 goes into the pension fund, and the balance goes to the PF account. Additionally, the full 12% of ₹15,000, being the employee's contribution, goes into the PF account.

If you are voluntarily contributing more than the limit, the additional amount from both the employer and employee will be credited to the PF account.

If you are an exempt employee, there is no PF, so the division into the two parts does not arise.

Here, the posting of Mr. Vinlen is regarding those who joined service/EPF on or after September 2014, and accordingly, I have replied.

Abbas.P.S

It is not compulsory to divert 8.33% of EPS for employees who joined on or after September 1, 2014, and have a basic salary exceeding Rs. 15,000 per month. If such employees become members of EPF, the entire 24% contribution (both from employee and employer) will go to their EPF account, and no amount will be diverted to EPS. Please refer to point No. 8 in the attached document.

Regards,
Sanjiv

The Employees' Pension Scheme was introduced to the EPF scheme on 16th November 1995, by superseding the Employees' Family Pension Scheme, 1971. This is compulsory for all who become members of the EPF scheme with no option.

Applicability of the Scheme from 1st September 2014

Your query pertains to the applicability of this scheme to members who join on or after 1st September 2014. Yes, they should be covered under the EPS scheme provided they become members of the Provident Fund Scheme. To include them in the PF scheme coverage, please refer to the recent amendment of the Provident Fund Scheme regarding the wage ceiling, which has been increased from 6500 to 15000 per month. There are no changes in the employer's subscription formula, and it remains the same except for the ceiling.

Regards,
Adoni Suguresh
Sr. Executive (Pers, Admin & Ind. Rels)
Rtd Labour Laws Consultant

New Change in EPS Contribution

Those who join EPF on or after 01.09.2014 with a salary of more than Rs. 15000/- cannot contribute to EPS. Their full contribution will be credited to EPF only. This is a new change.

Abbas. P.S

In this regard, I would like to say that if any employee is contributing above Rs. 15,000/-, then the employee has to contribute the maximum ceiling of Rs. 15,000/- at 8.33%, and the rest of the amount will be added to the EPF amount. If any employee wants to continue further in the Pension Scheme, they have to contribute an additional 1.16%. Therefore, I would like to clarify that the full contribution will not go to the EPF account.

Regards,
Sunil

Those who join EPF on or after 01.09.2014 with a salary of more than Rs. 15,000 will not get entry into the Pension Scheme. Then how can they contribute 1.16% to EPS? That is why I have posted that the full contribution will go to EPF.

Abbas.P.S

Dear Mr. Abbas,

Could you please mention the relevant EPFO circular via which it is directed that those who join EPF on or after 01.09.2014 with a salary of more than Rs. 15,000 will not get entry into the Pension Scheme of EPS?

Regards,
Krishna

Dear All, The EPFO circular, which Mr. Sanjiv Kumar Verma has enclosed, specifies point no. 8 as a clear indication of the ineligibility of EPS membership for those who have joined employment on or after 01.09.2014 with a salary exceeding Rs.15,000/-. My interpretation of the circular is as follows:

1. Those who were members of EPS before 01.09.2014 will remain so even if their salary increases beyond Rs.15,000/-.

2. Individuals who joined on or after 01.09.2014 with a salary of Rs.15,000/- or below will be EPS members, and even if their salary exceeds Rs.15,000/- in the future, they can continue their membership.

3. Those who joined on or after 01.09.2014 with a salary above Rs.15,000/- are ineligible for EPS membership. Their entire contribution will be deposited to the PF A/c only if the organization is willing to pay voluntarily.

Thanks & Regds.,
S K Bandyopadhyay (Howrah, WB)

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