Presentation on Higher Pension > EPF

Presentation on Higher Pension

• WHAT IS THE EPF HIGHER PENSION SCHEME?
• HIGHER PENSION CONTRIBUTION UNDER EPS
• HIGHER PENSION SCHEME APPLICATION LAST DATE
• EPF HIGHER PENSION ELIGIBILITY
• EPF HIGHER PENSION OPTION FORM
• HOW TO APPLY FOR A HIGHER PENSION IN EPF?
• HOW TO APPLY FOR A JOINT OPTION ONLINE PENSION FORM IN EPF?
• EPFO GUIDELINES FOR HIGHER PENSION
• EPF HIGHER PENSION CALCULATION
• FREQUENTLY ASKED QUESTIONS

In 1995, the Government introduced a pension scheme under Section 6A of the EPF Act. The Employees Pension Scheme, 1995 (EPS-95) provided that the employer’s contribution of 8.33% should be towards the pension scheme. The EPS-95 capped the maximum monthly pension at Rs.5,000 or Rs.6,000. Thus, employers had to contribute 8.33% of Rs.5,000, which was later raised to Rs.6,500, towards the pension scheme.

In March 1996, a provision was added to para 11(3) of the EPS-95, giving the employer and employee an option to contribute 8.33% of actual salary (above the cap of Rs.5,000 or Rs.6,500) to the EPS. Such a higher salary would be considered a pensionable salary. However, the EPFO gave six months for the employees to file a joint option form for higher pension contributions to the EPS.

The government amended the EPS-95 scheme effective from 01/09/2014. It increased the maximum pensionable salary to Rs.15,000. It also omitted the provision to para 11(3), i.e. exercise of the option by the employer and employee to contribute EPS on a higher salary amount.

Thus, employers would make an EPS contribution of 8.33% on a maximum of Rs.15,000 for the employees joining the EPF scheme after 01/09/2014, even when they draw a higher salary.

However, the employees who were part of EPS-95 or joined before 01/09/2014 could contribute 8.33% to EPS on the actual salary as against the cap of Rs.15,000 if they filed a new joint option with the EPFO within six months, i.e. 28/02/2015.

There were issues after the 2014 amendment regarding pension contributions on higher salaries. Many employees stated that they did know about the exercise of the joint option for contributing pension on the higher salary amount. The EPFO rejected the joint option filed by many employees. Employers contributed 8.33% of pension on employees’ actual salaries without filing the joint option, but the pensionable salary was taken as Rs.15,000 for pension calculation.

The Supreme Court provided that employees who were member of the EPS before 01/09/2014 but have not exercised the joint option can exercise it within 03/05/2023. The EPFO further extended the due date up to 26/06/2023. For such employees, a higher EPS contribution will be calculated from the date of their joining.

Initially, the last date to apply option online  for the higher pension was 3rd May 2023. However, later the last date for filing online option extended upto 26^th June 2023 as several representations/requests received from stockholders. Thus, the last date to apply for higher pension scheme is 26th June 2023.

EPFO issued a circular in December 2022 providing the eligibility criteria and application process for claiming a higher pension. Below are the eligibility criteria for a higher pension:

•The EPS members  prior to 01/09/2014.

•The employees exercised the joint option under para 11(3) of EPS-95 while being a member of EPS-95.

•The employees and employers contributed EPF on salaries exceeding the wage ceiling of Rs.5,000 or Rs.6,500.

•The EPFO declined the exercise of such an option.

However, the EPFO circular did not provide a higher pension option for employees who were part of the EPF before 01/09/2014 but still working/retired after 2014. As per the Supreme Court judgement, such employees were also eligible to claim a higher pension.

Thus, the EPFO issued another circular in February 2023 mentioning higher pension eligibility criteria for employees in service/retired after 0109/2014. Below are the eligibility criteria to file a joint option for getting a higher pension:

•The employees who were members before 01/09/2014 continued to be members after 01/09/2014.

•The both employees and employers contributed to EPF on salaries exceeding the wage ceiling of Rs.5,000 or Rs.6,500.

•The employees were members of EPS-95 prior to 01/09/2014 and did not exercise the joint option by employees and employers as provided under the deleted para 11(3) of the EPS and amendment of 2014.