Retired and Confused: Can I Benefit from the Supreme Court's Pension Ruling?

Hi Naresh,

I retired last November, and only a maximum of Rs. 541 and Rs. 1250/- was remitted to the Pension Fund, with the balance being remitted to the Provident Fund. I was employed in a co-op. bank and have withdrawn the PF upon reaching the superannuation age of 58. Currently, I draw a pension of Rs. 2963 per month.

Am I eligible to benefit from the Supreme Court judgment by paying the outstanding amount back to the EPFO?

Thank you,
Naresh

Increment in EPS Pension – Impact of Supreme Court Judgement for EPS Pensioners

Pensioners of the Employees’ Pension Scheme are jubilant about the recent Supreme Court judgement in the case of R C Gupta and others vs. EPFO. A lot is being discussed and written about the impact of this judgement on the pension of existing members as well as pensioners.

Let's see what impact this judgement brings. Also, let us explore the process by which the pensioners and members can claim the benefit of increased pension. But before that, let us look at the statutory wage limits around which the judgement revolves.

Sl No | Period | Wage Limit Per Month
--- | --- | ---
1 | 01.11.1952 to 31.05.1957 | Rs 300
2 | 01.06.1957 to 30.12.1962 | Rs 500
3 | 31.12.1962 to 10.12.1976 | Rs 1000
4 | 11.12.1976 to 31.08.1985 | Rs 1600
5 | 01.09.1985 to 31.10.1990 | Rs 2500
6 | 01.11.1990 to 30.09.1994 | Rs 3500
7 | 01.10.1994 to 31.05.2001 | Rs 5000
8 | 01.06.2001 to 31.08.2014 | Rs 6500
9 | 01.09.2014 onwards | Rs 15000

Issue involved in this judgement?

The pensionable wages ceiling is Rs 5000 w.e.f. 01.10.1994 and Rs 6500 w.e.f. 01.06.2001, on which PF and pension contribution is mandatory. Members and employers, in this case, contributed on wages more than the statutory ceiling limit as required under Para 11(3) of the Employees’ Pension Scheme 1995, read with Para 26(6) of the Employees’ Provident Fund Scheme 1952. The contribution was made without the approval of the joint option of the employer-employee to contribute on wages higher than the statutory ceiling limit.

Supreme Court Judgement

A beneficial scheme should not lapse for the reason that an option was not exercised before the due date, but remittance was made on wages above the statutory limit. Excess payment made in the PF amount may be taken back with interest. The benefit of pension on increased contribution may be given by necessary book adjustments.

Process Involved – Understanding through an Illustration

Hiralal, Bansilal, and Sonelal were employed in Parishram Enterprises at wages of Rs 9000 each from 1998 to 2013, when they both superannuated. For Hiralal, PF contributions were made at Rs 6500, while for Bansilal and Sonelal, contributions were made on full wages. The situation arising can be tabulated as below:

Members | Hiralal | Bansilal | Sonelal
--- | --- | --- | ---
Total Wages (A) | Rs 9000 | Rs 9000 | Rs 9000
PF Wages (A1) | Rs 6500 | Rs 9000 | Rs 9000
Pension Wages (A2) | Rs 6500 | Rs 6500 | Rs 9000
Contribution towards PF (B) | 12% of 6500 (Ee Share) + 3.67% of 6500 (Er share) | 12% of 9000 (Ee Share) + 3.67% of 9000 (Er share) + 8.33% of (9000-6500) | 12% of 9000 (Ee Share) + 3.67% of 9000 (Er share)
Contribution towards Pension (C) | 8.33% of 6500 (Er share) + 1.16% of 6500 (Govt) | 8.33% of 6500 (Er share) + 1.16% of 6500 (Govt) | 8.33% of 9000 (Er share) + 1.16% of 9000 (To be paid by member)
Whether PF account settled (D) | YES | YES | YES
Indicative PF and Pension Benefits (E) | 1. Principal plus interest on all contributions in PF account 2. Pension calculated on wage ceiling of Rs 6500. | 1. Principal plus interest on all contributions in PF account. 2. Pension calculated on wage ceiling of Rs 6500. | 1. Principal plus interest on all contributions in PF account. 2. Pension calculated on wage ceiling of Rs 6500. Balance in Pension account moved to PF account and settled with interest.
Any effect of SC judgement on Pension | No | No | Yes
Process to claim benefits | NA | NA | 1. Submit a request to the concerned PF office undertaking to refund excess PF claimed with interest. 2. Pension will be recalculated taking Pension Wages as Rs 9000.

Does it make sense to claim a pension increase on higher wages?

The perception around this judgement is “Supreme Court has directed EPFO to increase pension for all members.” However, in reality, the judgement simply permits members/pensioners to claim a pension on higher wages if the contribution was paid on higher wages. However, members/pensioners will have to return the excess PF claimed with interest. Most pensioners will not be in a position to return excess PF of several thousand rupees in order to get their pension increased by a few hundreds.

One vital thing to keep in mind: Suppose a member’s pension as per calculations comes to Rs 600 per month. However, due to the Government of India amendment of the Pension Scheme, they are currently paid a pension of Rs 1000 per month.

A hypothetical situation: If a pensioner deposits his excess PF claimed of Rs 12,000 and in turn gets his pension increased by 150 rupees per month. In the above case, his pension will become Rs 750 as per calculation; however, he will still get Rs 1000 pension. Foregoing PF benefits will have no benefit in such cases.

So, members/pensioners, make an informed choice!!!

Additional Information on Higher Pension Applications

Regional P.F. Commissioner, Mr. Sanjay Kesari, who was previously the chairperson responsible for creating the EPFO site, has confirmed that the department is now going to accept applications for a higher pension on the following grounds, in addition to all other explanations mentioned in the previous email:

1. Individuals who deposited higher wages from 1995 to 01.09.2014 continuously.
2. Submission of Form 3A from the employer for the said period.
3. The difference in the principal plus interest amount that needs to be deposited to receive a higher pension.
4. Members who have contributed after 01.09.2014 are not eligible.
5. The eligible member should be alive.
6. Nominees, divorcees, and children are not eligible.

Dear Sir,

An employee can contribute a higher amount above the wage ceiling limit of Rs. 15,000 from 1/9/2014 as they are already a member under EPS 1995.

Employee history:
- DOJ 1991 to 1993: A Comp
- 1995 to 2005: B Comp
- 2006 to 2009: C Comp
- 2009 to 2011: Comp D
- 2012 to 2016: E Comp
- 2017 to present: F Comp

All pensionable services are clubbed with Unexmpeted Trust Epfo.

Please clarify if the employee can contribute to EPS above the wage ceiling limit from the present date.

Thank you,
Raman
Bangalore

Dear Mr. R.K. Singh,

Thank you for enriching us. I am facing a peculiar situation and need your help. I superannuated in Dec. 2013 and applied for enhanced pension as per the Supreme Court order. EPFO Bandra is requesting Form 3A & 6A from my three former employers. Two employers have provided the records, but the third one states they do not retain records older than 15 years and advised me to obtain them from the EPFO Delhi office.

I reached out to the EPFO Delhi office and requested Form 3A and 6A from the years 2003 to 2005. They mentioned that they only maintain records up to three years and dispose of older records. EPFO Bandra has stated that they cannot process my application for enhanced pension until they receive the necessary records as per the circular.

Please advise me on the steps to take and provide contacts who can assist me in this matter. Is EPFO Bandra correct in demanding these forms for the calculation of enhanced pension? If the EPFO office destroys records after three years according to their system, how can employees provide these records?

I await your guidance.

Best Regards,
Rajesh Chandra Lal
[Phone Number Removed For Privacy-Reasons]