On Dec. 29, IND EPFO issued circular letter re Supreme court decision.
IND EPFO issued circular letter re compliance with instructions and orders contained in para 44(ix) of Supreme court judgment dated Nov. 4, 2022, case involving IND EPFO.
Document dated Dec. 29, 2022, was added on Jan. 22, 2023, due to request by client.
Dispute concerned the legality of amendments and modifications made by the central government to the Employees’ pension scheme 1995, which was made under the Employees’ provident funds and miscellaneous provisions Act, 1952 (EPF act 1952).
Notification dated Aug. 22, 2014 introduced amendments to be effective Sep. 1, 2014.
These amendments enhanced the period for the calculation of average pensionable salary from 12 months to 60 months, and limited the maximum pensionable salary at INR 15,000 per month, which was INR 6.5k per month prior to the amendment.
Employees whose salaries exceeded INR 15k were required to exercise a fresh option in order to continue to contribute to the scheme calculated on their actual salary.
Such employees also had to make an additional contribution at the rate of 1.16% on salary exceeding INR 15k, as an additional contribution from/out of contributions payable by the employees for each month under the provisions of the EPF act 1952.
Inter alia, validity of the amendments was challenged on the ground that requirement for an additional contribution by employees was ultra vires the EPF act 1952.
The Supreme court found the Aug. 2014 amendments to be legal and valid.
IND EPFO Circular
IND EPFO brought the judgment to attention of zonal/regional offices, noted IND GVT has directed EPFO to take action to implement para 44(ix) of the judgment and to give adequate publicity to any decisions that IND EPFO makes regarding implementation.
Para 44(ix) provides that the fund authorities shall implement within eight weeks.
This circular provides guidance to employees who wish to exercise options, and sets out application details, documentation required, procedure and grievances.
Feb. 2023 Special Leave Petition
On Feb. 20, 2023, IND EPFO issued a circular letter re compliance of orders contained in para 44(iii) and (iv) read with para 44(v) of Supreme Court judgment Nov. 4, 2022.
Field offices should implement the directions contained in para 44(iii) and (iv) read with para 44(v) of the judgment of the Supreme Court within the stipulated timeline.
Circular provides guidance to pension scheme members who exercised the option under para 11(3) of 1995 scheme and continued to be in service on Sep. 1, 2014.
Guidance also provided to members of the scheme who did not exercise the option.
Employees who did not exercise option are entitled to exercise joint option under former para 11(3) and existing para 11(4) within the extended period of four months.
Guidance on how to submit joint option under para 11(3) and 11(4) to regional office.
Method of deposit and computation of pension will follow in a subsequent circular.
Mar. 4, 2023 Publicizing Online Process
On Mar. 4, 2023, IND LAB stated that the online joint (employee and employer) option form with the necessary documents has been hosted in the IND EPFO unified portal.
Document dated Mar. 4, 2023, received Mar. 20, and summarized on Mar. 22.
The form paves the way for giving effect to the Nov. 2022 supreme court judgment, while adhering to the basic scheme provisions; more than 8000 applications to date.
IND EPFO has been making efforts to publicize the online process of joint options, which originally closed on Mar. 3, 2023 and is now available until to May 3, 2023.
Mar. 13, 2023 Application Deadline Extended
On Mar. 13, 2023, IND LAB reported the online facility for submitting applications for validation of joint options re employees who retired before Sep. 1, 2014 and exercised joint options before their retirement, has been extended from Mar. 3 to May 3, 2023.
Document dated Mar. 13, 2023, received from IND LAB Mar. 20, summarized Mar. 22.
Apr. 2023 Online Facility
On Apr. 23, 2023, IND PFRDA issued circular on application for validation of options - scrutiny of information of wage details submitted by the employee and employer.
An online facility has been deployed for receipt of application forms of joint options from the employees who retired prior to Sep. 1, 2014, and forms from employees.
In case application is not approved, corrections can be made within one month.
Facility will be available until May 3, 2023.
Document dated Apr. 23, 2023, received from PFRDA Apr. 24, summarized on Apr. 26.
May 2, 2023 Deadline Further Extended
On May 2, 2023, IND LAB extended date for filing pension on higher wages application.
It further extended deadline from May 3, 2023 to Jun 26, 2023.
Document dated May 2, 2023, received from IND LAB May 10, summarized on May 11.
May 3, 2023 Supreme Court Case
On May 3, 2023, IND LAB issued notice to comply with order re pension on high wage.
Eligible members shall have a further chance to exercise option; deadline extended.
Require members to contribute 1.16% of their salary to the extent such salary exceed INR 15k per month, as an additional contribution under the amended scheme.
Draw 1.16% additional contribution from the 12% employer contribution into pension.
Court directed the authorities to make necessary adjustments within 6 months.
Document dated May 3, 2023, received from IND LAB May 10, summarized on May 12.
May 11, 2023 Application for Option Validation
On May 11, 2023, IND EPFO issued a circular re validation of option and joint options.
Specified the calculation of due contributions and classification of the applications.
Pensioners shall deposit and give consent for diversion of the dues within 3 months.
Pensioners may pay contribution by online facility provided by IND EPFO or check.
Jun. 2023 Judgment Implementation
On Jun. 14, 2023, IND EPFO issued circular on the implementation of the supreme court judgment on the applications on proof and validation of joint options.
References that have been received from all stakeholders as to the list of admissible documents may be considered as joint option proof per para 26(6) of the EPF scheme.
The circular outlines procedures for when joint requests under para 26(6) are not readily available with applicants who have filed applications for validation of options.
It outlines the case of applicants otherwise eligible for pension on higher wages.
The procedure also applies to applications for validation of option or joint options received from applicants from provident funds (PF) that are exempted establishments.
Oct. 2023 Editorial Update
On Oct. 3, 2023, Reg-Track made an editorial update to summary above to add link to Hindi version of IND EPFO's corrigendum of Jan. 5, 2023, received on Oct. 3, 2023.
Dec. 2023 IND LAB on Verdict Implementation
On Dec. 4, 2023, IND LAB issued release regarding implementation of the judgment above, and said in the case of pensioners/members found eligible for pension on higher wages, demand notices are being issued to the pensioners/members.
IND LAB said amount of pension payable on higher salary will vary from case to case.
Pension fund under the Employees' Pension Scheme (EPS) 1995 is a pooled fund.
In the pension fund, individual accounts are not maintained; members of EPS 1995 are eligible for withdrawal benefit or pension depending on eligibility based on the number of years of service; per Mar. 31, 2019 evaluation, the pension fund is in deficit.
Document dated Dec. 4, 2023, received from IND LAB Dec. 8, summarized on Dec. 12.
Jan. 2024 Additional Extension Granted
On Jan. 3, 2024, IND LAB said IND EPFO granted an extension of time, re above, for the employers for uploading wage details online; the new deadline is May 31, 2024.
Over 3.6 lakh applications for validation of option or joint options for pension on higher wages are still pending with employers for processing; it said IND EPFO granted this extension in order to ensure that employers process these remaining applications.
