Supreme Court Verdict on the EPS Pension Scheme: Check who is eligible for higher EPS pension under EPF scheme

The EPF Scheme was amended in 2014, which led to a conflict between the employees and the EPFO (Employees Provident Fund Organization). In the latest judgement by Supreme Court on November 4 2022, the dispute has been put to rest.

EPF Scheme was amended in 2014

The EPF pension scheme is a pension scheme for employees which was introduced in 1995. The EPFO (Employ Provident Fund Organisation) runs the pension scheme and provides pensions to employees when they become 58 years old. The EPF pension scheme became a topic for discussion when an amendment by the EPFO was released on August 22 2014. 

Under the Employee pension scheme, employees and the employer contribute 12 per cent to the Employee provident fund. The contribution of the employee is entirely to the EPF, while 8.3 per cent of the employer contribution is to the EPS.

What were the amendments released by EPFO in 2014?

The amendments for the EPS pension scheme released in 2014 were:

  1. The coverage for pension provided to the employees was increased if the employee was earning more than Rs 15,000. The previous salary cap for pensions was increased from Rs 6,500 to Rs 15,000.
  2. The members earning more than Rs 15,000 were required to contribute an additional 1.16 per cent to the fund.
  3. The employees were given a timeline of 6 months to utilize the opportunity provided by the EPS pension scheme amendment.

What was the reason behind the conflict with the employees?

The reasons which led to the conflict between the EPFO and the employees were:

  1. The employees claimed that the timeline for utilizing the amendment's opportunity was unknown. These employees told the court that they were not communicated about the deadline. 
  2. The additional contribution of 1.16 per cent was also deemed unnecessary by some employees.

Various cases were registered by employees across the country in different cities but had not yet received a verdict acceptable to them and the EPFO.

What was the judgement of the Supreme Court released on November 4 2022?

The judgement given by the Supreme court consists of the following decisions:

  1. The additional contribution of 1.16 per cent, made compulsory by the amendment, was deemed invalid. However, the court has provided 6 months to the EPFO, after which this ruling would come into effect. EPFO will have to formulate a strategy to get additional contributions from the employees without causing a decline in the fund.
  2. For those employees who joined the EPS on or after September 1 2014, the pensions will be calculated on the higher salary. The employees would have to provide a declaration giving proof that they have been making higher contributions to the pension scheme since the amendment.

The court has stayed most of the amendments made by the EPFO but has provided relief to certain employees.

Also readEPF contribution with raise in salary

Final Words

The Supreme Court's judgement on the EPF pension scheme on November 4, 2022, has provided relief to both the EPFO and its employees. The employees need to be aware of the judgement to take necessary actions. 

The EPF pension scheme is a pension scheme for employees which was introduced in 1995. The EPFO (Employ Provident Fund Organisation) runs the pension scheme and provides pensions to employees when they become 58 years old. The EPF pension scheme became a topic for discussion when an amendment by the EPFO was released on August 22 2014. 

Under the Employee pension scheme, employees and the employer contribute 12 per cent to the Employee provident fund. The contribution of the employee is entirely to the EPF, while 8.3 per cent of the employer contribution is to the EPS.

What were the amendments released by EPFO in 2014?

The amendments for the EPS pension scheme released in 2014 were:

  1. The coverage for pension provided to the employees was increased if the employee was earning more than Rs 15,000. The previous salary cap for pensions was increased from Rs 6,500 to Rs 15,000.
  2. The members earning more than Rs 15,000 were required to contribute an additional 1.16 per cent to the fund.
  3. The employees were given a timeline of 6 months to utilize the opportunity provided by the EPS pension scheme amendment.

What was the reason behind the conflict with the employees?

The reasons which led to the conflict between the EPFO and the employees were:

  1. The employees claimed that the timeline for utilizing the amendment's opportunity was unknown. These employees told the court that they were not communicated about the deadline. 
  2. The additional contribution of 1.16 per cent was also deemed unnecessary by some employees.

Various cases were registered by employees across the country in different cities but had not yet received a verdict acceptable to them and the EPFO.

What was the judgement of the Supreme Court released on November 4 2022?

The judgement given by the Supreme court consists of the following decisions:

  1. The additional contribution of 1.16 per cent, made compulsory by the amendment, was deemed invalid. However, the court has provided 6 months to the EPFO, after which this ruling would come into effect. EPFO will have to formulate a strategy to get additional contributions from the employees without causing a decline in the fund.
  2. For those employees who joined the EPS on or after September 1 2014, the pensions will be calculated on the higher salary. The employees would have to provide a declaration giving proof that they have been making higher contributions to the pension scheme since the amendment.

The court has stayed most of the amendments made by the EPFO but has provided relief to certain employees.

Also readEPF contribution with raise in salary

Final Words

The Supreme Court's judgement on the EPF pension scheme on November 4, 2022, has provided relief to both the EPFO and its employees. The employees need to be aware of the judgement to take necessary actions. 

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