- Date : 15/03/2023
- Read: 4 mins
Are you an employee contributing to the provident fund? Do you know that you may be eligible for a higher pension? Read this article to know more about it.
For many individuals, the employees' provident fund (EPF) is a crucial source of retirement income. This fund is designed to provide employees with financial security post-employment. However, some individuals may not be aware that they could potentially qualify for a higher pension payout. In this article, we will examine the criteria for qualifying for a higher pension under the EPF. The entire article has been organised under the following headings to ensure ease of understanding:
- Who is entitled to receive an increased pension benefit through EPFO?
- Which individuals may not be eligible to receive a higher pension benefit from EPFO?
- What is the process for eligible pensioners to apply for an increased pension?
The Indian Supreme Court has upheld the Ministry of Labour and Employment's 1995 Employees' Pension Scheme amendments. This scheme has limited employees' access to higher pensions, their entry into the scheme above a certain salary level, and pension calculation methods. However, until 3 March 2023, eligible members can apply jointly with their employers to the Employees' Provident Fund Organisation (EPFO) for a higher pension. The EPFO issued a circular on 29 December 2022, providing clarity to pensioners who previously requested a higher pension but got rejected by the EPFO. This ruling has provided a sense of security to pensioners who were previously uncertain about their pension rights.
Also Read: About markets
Who is entitled to receive an increased pension benefit through EPFO?
As per the circular issued by EPFO, employees who had contributed towards the higher wages mandated under the EPF scheme (before 1 September 2014) and opted for a higher pension prior to their retirement but were explicitly rejected by EPFO are eligible to apply for an increased pension. Hence following pensioners are eligible for higher pension benefits:
- Pensioners who were employed and contributed towards salaries exceeding the previous wage ceiling of Rs 5,000 or Rs 6,500; and
- While being a member of EPS-95, opted for the pre-amendment scheme under the Employees' Pension Scheme (EPS) jointly; and
- EPFO rejected the option exercised.
According to Puneet Gupta, Tax Partner of People Advisory Services at EY India, employees who were members of the Employees' Pension Scheme on 1 September 2014 and did not choose a higher pension earlier, may be eligible for an increased pension, as stated in Para 44(iv) of the Supreme Court's ruling on 4 November 2022. These employees have until 3 March 2023 (four months from the ruling) to opt for a higher pension. However, the circular issued by EPFO on 29 December 2022 does not specify the steps these employees should take to obtain the higher pension benefit. It is possible that EPFO may issue a separate circular to provide guidance on how these employees can apply for higher pension benefits.
Also Read: Retirement solutions
Which individuals may not be eligible to receive a higher pension benefit from EPFO?
The circular has specified that certain employees will not qualify for an increased pension benefit, following the Supreme Court ruling dated 4 November 2022.
Those employees who retired before 1 September 2014 and did not avail of the option under paragraph 11(3) of the pre-amendment scheme are no longer considered members and, hence, not eligible for benefits under the recent ruling.
Employees who retired before 1 September 2014 and opted for paragraph 11(3) of the 1995 scheme will be covered under the provision as it existed before the 2014 amendment to the pension scheme.
What is the process for eligible pensioners to apply for an increased pension?
Pensioners who are eligible should go to their designated regional EPFO office with their filled-out application form and necessary documents to apply for an increased pension.
Also Read: About investments
According to an EPFO circular, pensioners who opted for a higher pension before retirement but were rejected by EPFO, and those who contributed towards higher wages before 1st September 2014 and opted for the pre-amendment scheme jointly but were rejected, are eligible for increased pension benefits. Those who retired before 1st September 2014 and did not avail of the option under paragraph 11(3) are not eligible. Eligible pensioners must apply at their regional EPFO office with the necessary documents.
For many individuals, the employees' provident fund (EPF) is a crucial source of retirement income. This fund is designed to provide employees with financial security post-employment. However, some individuals may not be aware that they could potentially qualify for a higher pension payout. In this article, we will examine the criteria for qualifying for a higher pension under the EPF. The entire article has been organised under the following headings to ensure ease of understanding:
- Who is entitled to receive an increased pension benefit through EPFO?
- Which individuals may not be eligible to receive a higher pension benefit from EPFO?
- What is the process for eligible pensioners to apply for an increased pension?
The Indian Supreme Court has upheld the Ministry of Labour and Employment's 1995 Employees' Pension Scheme amendments. This scheme has limited employees' access to higher pensions, their entry into the scheme above a certain salary level, and pension calculation methods. However, until 3 March 2023, eligible members can apply jointly with their employers to the Employees' Provident Fund Organisation (EPFO) for a higher pension. The EPFO issued a circular on 29 December 2022, providing clarity to pensioners who previously requested a higher pension but got rejected by the EPFO. This ruling has provided a sense of security to pensioners who were previously uncertain about their pension rights.
Also Read: About markets
Who is entitled to receive an increased pension benefit through EPFO?
As per the circular issued by EPFO, employees who had contributed towards the higher wages mandated under the EPF scheme (before 1 September 2014) and opted for a higher pension prior to their retirement but were explicitly rejected by EPFO are eligible to apply for an increased pension. Hence following pensioners are eligible for higher pension benefits:
- Pensioners who were employed and contributed towards salaries exceeding the previous wage ceiling of Rs 5,000 or Rs 6,500; and
- While being a member of EPS-95, opted for the pre-amendment scheme under the Employees' Pension Scheme (EPS) jointly; and
- EPFO rejected the option exercised.
According to Puneet Gupta, Tax Partner of People Advisory Services at EY India, employees who were members of the Employees' Pension Scheme on 1 September 2014 and did not choose a higher pension earlier, may be eligible for an increased pension, as stated in Para 44(iv) of the Supreme Court's ruling on 4 November 2022. These employees have until 3 March 2023 (four months from the ruling) to opt for a higher pension. However, the circular issued by EPFO on 29 December 2022 does not specify the steps these employees should take to obtain the higher pension benefit. It is possible that EPFO may issue a separate circular to provide guidance on how these employees can apply for higher pension benefits.
Also Read: Retirement solutions
Which individuals may not be eligible to receive a higher pension benefit from EPFO?
The circular has specified that certain employees will not qualify for an increased pension benefit, following the Supreme Court ruling dated 4 November 2022.
Those employees who retired before 1 September 2014 and did not avail of the option under paragraph 11(3) of the pre-amendment scheme are no longer considered members and, hence, not eligible for benefits under the recent ruling.
Employees who retired before 1 September 2014 and opted for paragraph 11(3) of the 1995 scheme will be covered under the provision as it existed before the 2014 amendment to the pension scheme.
What is the process for eligible pensioners to apply for an increased pension?
Pensioners who are eligible should go to their designated regional EPFO office with their filled-out application form and necessary documents to apply for an increased pension.
Also Read: About investments
According to an EPFO circular, pensioners who opted for a higher pension before retirement but were rejected by EPFO, and those who contributed towards higher wages before 1st September 2014 and opted for the pre-amendment scheme jointly but were rejected, are eligible for increased pension benefits. Those who retired before 1st September 2014 and did not avail of the option under paragraph 11(3) are not eligible. Eligible pensioners must apply at their regional EPFO office with the necessary documents.
