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EPS 95 HIGHER PENSION SUPREME COURT ORDER: EPFO INCRESED EPS 95 PENSION FROM Rs. 2372 TO Rs. 30592


As Every EPS 95 Pensioners knows Praveen Kohli, 62, who retired four years ago as a general manager with Haryana Tourism, got nearly 1200 per cent hike in his monthly pension to Rs 30,592 from Rs 2,372 on November 1.

The sudden spurt in his pension was due to a Supreme Court order of October, which directed the Employees' Provident Fund Organisation (EPFO) to revise pension of 12 petitioners under the employee's pension scheme (EPS).


EPS is a scheme run by EPFO and is a part of Employee’s Provident Fund (EPF). Private sector employees, who are member of EPFO, contribute 12 per cent of their basic salary and dearness allowance(DA) every month to their EPF, while a matching 12 contribution is made by their employer. Out of the 12 per cent employer's contribution, 8.33 per cent goes to EPS, subject to a maximum ceiling of Rs 1,250 per month (based on 8.33 per cent of current cap Rs 15,000 including basic plus DA). The remaining part of the employer's contribution goes to the EPF of the member.


Even if your basic salary is more than Rs 15,000 per month, the employer can’t contribute more than Rs 1,250 to EPS every month, as per the EPFO rule.

The EPS is payable only after the age of superannuation.

The current cap of Rs 1,250 on EPS contribution was last revised in September 2014 from Rs 541.45 based on a salary cap of Rs 6,500 (basic plus DA). Prior to 2001, the ceiling was Rs 5,000 which yielded a maximum contribution of Rs 416.5.

However, Mr Kohli's spurt in salary was due to an important amendment to the EPS Act in 1996, in which members were allowed to raise pension contribution to 8.33 per cent of salary (basic plus DA) irrespective of what the amount is, according to the report. But nobody opted for the benefit upto 2005.

In 2005, following media reports, including in TOI, several private EPF fund trustees and employees approached EPFO with the demand to remove ceiling on their EPS contribution and raise it to their total salary. The EPFO rejected the demand claiming that response should have come within six months of the 1996 amendment.


Many cases were filed against EPFO in various high courts. By 2016 all except one high court ruled against EPFO stating that the six-month deadline was arbitrary and the employees must be allowed to raise their pension contribution whenever they wish to, the Times of India report said.

The case then went to Supreme Court which, in two separate rulings in 2016, ruled in favour of the employees’ right to raise their contributions to their pension fund without imposing any cut-off date for eligibility.

EPFO implemented this court order following a strong fight put up by petitioners like Mr Kohli. Starting from November Mr Kohli got higher pension.

Meanwhile, to increase his pension from Rs 2,372 to Rs 30,592, Mr Kohli, paid Rs 15.37 lakh as the difference between EPS contribution he had made while he was in service and the contribution he would have made if he was allowed to raise it to his fully salary. He also got Rs 13.23 lakh as arrears for the higher pension that was entitled to for four years spent in retirement before November 2017. So the additional contribution he had to make for the increased pension was only Rs 2.14 lakh.


So now anyone who joined EPFO before September 2014, will be eligible for higher pension, if they opt to raise their EPS contribution, says the Times of India report. They can submit applications to their company and the EPFO and get up to half of their last average monthly salary as pension.



 

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