Ministry of Labour and EPFO complies with SC’s directions regarding higher pension option
The requirement for members to contribute 1.16 percent of their salary as an additional contribution under the amended scheme was held to be in violation of the provisions of the Employees' Provident Fund and Miscellaneous Provisions Act,1952 (EPF & MP Act) by the Supreme Court.
Ministry of Labour and EPFO complies with SC’s directions regarding higher pension option
EPFO extends the deadline for applying for a pension on higher salaries, with a rectification option for re-submitting the joint application. However, the option for higher pension opt by EPF subscribers has received mixed reactions from experts, but the labour ministry and EPFO attempted to embrace EPS subscribers who do not opt for higher pension option and those who applied, but the information is incorrect.
According to a press release issued by the Ministry of Labour and Employment on May 3, 2023, the EPFO has established procedures to gather applications for validation of option/joint option from pensioners/members in accordance with the Supreme Court judgement dated November 4, 2022. The procedure will be made easier to follow online. To date, over 12 lakh applications have been received. The online service, which was supposed to be available just until May 3, 2023, is now available until June 26, 2023.
The Supreme Court initially directed that pensioners who retired before 1.9.2014 after exercising joint options under paragraph 11(3) of the EPS,1995, be given the opportunity, but the joint options were rejected by the Employees’ Provident Fund Organisation (EPFO) due to the eight-week cut-off date. In accordance with this judgement, the EPFO published a circular in December 2022 for these retirees to file online applications for validation of joint options. The deadline for application submission was March 3, 2023. However, the deadline was extended to 3 Mary 2023, and it has now been extended to 26 June 2023.
The Supreme Court further ruled that all members who were in service prior to September 1, 2014 and continued to be in service on or after September 1, 2014, and who did not exercise the joint option due to the cut-off date but were otherwise eligible to do so, should be given another chance to do so. The deadline for providing options was to be extended by four months, according to the Supreme Court. Following this order, EPFO issued instructions on 20 February 2023 for these employees/pensioners to file online joint options. The deadline was May 3, 2023. However, the deadline has been pushed back to June 26, 2023.
The requirement for members to contribute 1.16 percent of their salary as an additional contribution under the amended scheme was held to be in violation of the provisions of the Employees’ Provident Fund and Miscellaneous Provisions Act,1952 (EPF & MP Act) by the Supreme Court. The Supreme Court then directed the authorities to make the required changes to the Scheme within six months.
After considering all legal and administrative considerations, it was determined that since the Code on Social Security 2020 (the Code) had already been notified, it would be appropriate to implement relevant sections of the Code. The Code calls for the repeal of the EPF and MP Acts. As a result, certain provisions of the EPF and MP Act are abolished, while the corresponding provisions of the Code remain in effect.
It has now been determined to take an additional 1.16 percent contribution from the employers’ overall 12 percent payment to the provident fund. This clause is retroactive in nature, as directed by the Supreme Court. To that end, the Ministry of Labour and Employment published two notices on 3 May 2023, in accordance with all the Supreme Court’s directives.
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