This ruling applies only to employees of the establishments who have paid the PF contributions on actual salary without restricting the PF qualifying salary to Rs 6500. For example, XYZ Ltd is an establishment which use to contribute the employer share of PF on the actual salary. Mr B's PF qualifying salary was Rs 10000 and the employer share of 12% was deposited like, Rs 541 (8.33% of Rs 6500) to Pension Fund and the balance Rs 659 (ie, 1200 minus 541) to PF along with employee's share of Rs 1200. That means, though the share of employer was Rs 1200, the employer was permitted only to contribute Rs 541 to Pension Fund. At the same time he had contributed a higher amount to provident Fund, ie, Rs 659 as against Rs 367 (3.67% of Rs 10000). As per the Supreme Court verdict, the PF Organisation will have to rearrange the funds by transferring the additional amount of Rs 292 (Rs 659 minus Rs 367) from the PF account to Pension account so that the Pension Fund will become equal to 8.33% of Rs 10000 or Rs 833 (ie, 541 already deposited Plus Rs 292 now getting transferred) Now by doing this the Provident Fund will become Rs 367. If you have already withdrawn the PF, ie, Rs 659, obviously with your own share of Rs 1200, you have to refund Rs 292 to Provident Fund Organisation who will put this amount in your Pension Fund account to recalculate your pension.
Formerly the Pension qualifying salary was Rs 6500 but since the employer had contributed PF on higher salary, ie, Rs 10000, this will become the Pension qualifying salary. Obviously the pension will increase. If your PF qualifying salary had been even high, say Rs 60000 or Rs 100000, the pension would also go up. However, with the last amendment of 2014, the PF Organisation has put a ceiling on pension contributing salary to Rs 15000. Since then this has become Rs 15000. With this amendment the pension calculating formula has also been changed. Now, the actual contribution or Rs 15000 whichever is lower will be the base for pension calculation and for the period prior to Sept, 2014, the average of pension qualifying salary for 5 years will also be taken. In this calculation we can make use of the Supreme Court verdict and put the same PF contributed salary as the Pension qualifying salary.
I must say that employees of establishments who do not even think of giving PF to their employees and those who give it just for statutory compliance will not get the benefit of the verdict because they will contribute just what the law states, ie, contribute Pf on Rs 6500 or Rs 15000, as the case may be.