Dear all,
The EPFO has issued a circular to implement the SC ruling. The circular issued on February 20, 2023 (Attached in mail), lays down this procedure.
- Employees who were members of EPF before September 1, 2014, can apply for a higher pension at full basic salary now. But to be eligible, they should still be contributing to EPF, and their employer should have made EPF contributions on their full basic pay so far.
- Submit a joint option form with their employer to the regional EPF office for a higher pension. They also need to consent to allow their past employer's contributions (at 8.33 percent of full basic pay) to be diverted from their EPF account to the government's EPS kitty.
- Submit the application on the EPF Member portal by May 3, 2023. Under the new rules, you can now contribute 8.33 percent of actual basic pay towards the scheme, which earlier had a capping of Rs 15,000.
This circular is relevant to you only if you have enrolled in the EPF before September 1, 2014, and are still working. Currently, your pension after retirement will be calculated based on the formula:
Pensionable salary (60 Month Average Salary) x pensionable service/70. Your pensionable salary in the above formula would have been capped at ₹15,000/month. But if you now opt for a higher pension based on your actual pay (basic salary), the pensionable salary in the above formula will be much higher. This can give you a higher government-guaranteed pension after retirement. But do note that opting for a higher pension comes with a trade-off. It will mean part of your EPF balances accumulated so far with interest will be permanently transferred to the Centre's EPS kitty. This will mean a lower lump sum payout to you at retirement. It means a higher pension contribution reduces the EPF lump sum corpus that you get on retirement.
EPFO has introduced a new procedure that allows subscribers and their employers to jointly apply for a higher pension under the Employees' Pension Scheme (EPS). The EPFO, via a circular dated February 20, 2023, acknowledged that the employees who satisfy the following conditions along with their employers may submit a joint option application with the EPFO under the Pension Scheme to avail of a higher pension.
The EPFO order said that existing employees and those who were members of EPS as of September 1, 2014, can claim a higher pension based on actual basic salary beyond the prescribed ceiling in the EPS of 1995. The Employees Provident Fund Organisation (EPFO) has come out with new guidelines for employees to opt for a higher pension. If they fail to follow EPFO's new procedure, they might end up getting a lesser pension. The deadline to apply for a higher pension under EPS was May 3, 2023, as mandated by the Supreme Court judgment.
Your expert suggestion on this.
Regards
The EPFO has issued a circular to implement the SC ruling. The circular issued on February 20, 2023 (Attached in mail), lays down this procedure.
- Employees who were members of EPF before September 1, 2014, can apply for a higher pension at full basic salary now. But to be eligible, they should still be contributing to EPF, and their employer should have made EPF contributions on their full basic pay so far.
- Submit a joint option form with their employer to the regional EPF office for a higher pension. They also need to consent to allow their past employer's contributions (at 8.33 percent of full basic pay) to be diverted from their EPF account to the government's EPS kitty.
- Submit the application on the EPF Member portal by May 3, 2023. Under the new rules, you can now contribute 8.33 percent of actual basic pay towards the scheme, which earlier had a capping of Rs 15,000.
This circular is relevant to you only if you have enrolled in the EPF before September 1, 2014, and are still working. Currently, your pension after retirement will be calculated based on the formula:
Pensionable salary (60 Month Average Salary) x pensionable service/70. Your pensionable salary in the above formula would have been capped at ₹15,000/month. But if you now opt for a higher pension based on your actual pay (basic salary), the pensionable salary in the above formula will be much higher. This can give you a higher government-guaranteed pension after retirement. But do note that opting for a higher pension comes with a trade-off. It will mean part of your EPF balances accumulated so far with interest will be permanently transferred to the Centre's EPS kitty. This will mean a lower lump sum payout to you at retirement. It means a higher pension contribution reduces the EPF lump sum corpus that you get on retirement.
EPFO has introduced a new procedure that allows subscribers and their employers to jointly apply for a higher pension under the Employees' Pension Scheme (EPS). The EPFO, via a circular dated February 20, 2023, acknowledged that the employees who satisfy the following conditions along with their employers may submit a joint option application with the EPFO under the Pension Scheme to avail of a higher pension.
The EPFO order said that existing employees and those who were members of EPS as of September 1, 2014, can claim a higher pension based on actual basic salary beyond the prescribed ceiling in the EPS of 1995. The Employees Provident Fund Organisation (EPFO) has come out with new guidelines for employees to opt for a higher pension. If they fail to follow EPFO's new procedure, they might end up getting a lesser pension. The deadline to apply for a higher pension under EPS was May 3, 2023, as mandated by the Supreme Court judgment.
Your expert suggestion on this.
Regards