- Date : 24/02/2023
- Read: 3 mins
The Supreme Court has instructed that no one who retired before September 1, 2014, can avail of this benefit.
You might have received an email from your employer to get a higher pension post-retirement if you were a salaried employee from September 1, 2014, under the Employees' Pension Scheme (EPS). You will have a last chance to opt for it till March 3. The Supreme Court has instructed that no one who retired before September 1, 2014, can avail of this benefit. You can be a member by contributing your actual wages and not limiting the wage ceiling at Rs. 15,000 per month. It is applicable assuming the actual wages are higher than the ceiling and the contribution to the PF has been the total basic wages.
EPS Definition & Importance
Employee Pension Scheme (EPS) and Employees' Provident Fund (EPF) are governed by the EPFO and provide salaried employees with pension and provident fund benefits. 12% of employee's basic salary goes toward their monthly EPF account. The employer matches this with another 12%. Your entire contribution goes to this account, and a part of the employer's contribution goes into it. 8.33% of the employer's contribution goes into EPS. The remaining goes into EPF. You get the entire lump sum upon retirement.
EPS grows until retirement, and you get a monthly pension after retirement. The apex court has decided to increase the kitty of your pension. While the PF is an employee-specific corpus, the EPS is not. EPF is kept aside in a corpus specially made for you. You get the corpus upon retirement with interest. EPS is not a corpus, and the EPFO pays you a regular pension from the kitty you have built over the years through your contributions. Your spouse will get 50% of the eligible pension upon your death. Your children get a pension equal to 25% until 25 years of age if you and your spouse die.
Why The Change In Law?
Employees could contribute to the EPS corpus according to 1995 EPS regulations, based on a higher wage ceiling salary. The EPS provided employees an option to contribute through higher wages before 2014. While many employees did not opt for it, others had their applications rejected. The matter reached the apex court after it was challenged in courts.
The EPFO issued a circular in 2014 changing the EPS. It said that anyone who contributes to EPS at a %age higher than their statutory wage should provide a written declaration if they want to continue with a higher contribution. However, failure to do so would result in the higher contribution being taken out and deposited in the EPF accounts.