In a big judgment, the Supreme Court on Friday upheld the Employees’ Pension (Amendment) Scheme, 2014, however learn out sure provisions referring to present subscribers of the scheme.
A 3-judge bench of Chief Justice of India UU Lalit and Justices Aniruddha Bose and Sudhanshu Dhulia stated the amendments to the scheme will apply to staff of exempted institutions as they do to staff of standard institutions. There are round 1,300 corporations within the record of entities exempted from EPFO (Employees’ Provident Fund Organisation).
In a nutshell, Friday’s Supreme Court ruling has given EPFO members, who’ve availed EPS, one other alternative to contribute as much as 8.33 per cent of their precise wage over the subsequent 4 months – whereas the restrict of pensionable wage is 8.33 per cent. . 15,000 monthly – for pension.
The EPS revision dated 22 August 2014 elevated the pensionable wage restrict from Rs 6,500 monthly to Rs 15,000 monthly, and allowed solely present members (as on 1 September 2014) to train the choice to contribute 8.33 monthly with their employers. was allowed to do. Percentage on their precise wage (if it exceeds the restrict) in the direction of pension fund. This may be prolonged for an extra interval of six months on the discretion of the Regional Provident Fund Commissioner. However, it excluded new members who earned greater than ₹15,000 and joined the scheme utterly after September 2014.
The modification requires such members (whose precise wage is greater than Rs 15,000 monthly) to make a further contribution of 1.16 per cent of the wage exceeding Rs 15,000 monthly to the pension fund.
Existing members who didn’t train the choice inside the stipulated interval or the prolonged interval, had been to not have exercised the choice to contribute over the pensionable wage restrict and the extra contribution already made to the Pension Fund was to be transferred to the Provident Fund Account. Member, with curiosity.
Sources stated solely a negligible proportion of EPFO members – these with salaries above the pensionable wage restrict of Rs 15,000 monthly – had opted to contribute based mostly on their precise wage.
increased pension possibility
The commerce unions had been opposing the federal government’s argument that employees in any respect ranges ought to have extra liquidity. The Supreme Court, by means of its judgment, has let the workers determine whether or not they need to go for increased provident fund or go for increased pension payout.
The Supreme Court’s resolution got here on appeals filed by the EPFO in opposition to the selections of the Kerala, Rajasthan and Delhi High Courts that struck down the Employees’ Pension (Amendment) Scheme, 2014.
In train of substantive powers below Article 142, the Supreme Court prolonged the time for selecting the brand new scheme by 4 months. “There was uncertainty about the validity of the post amendment scheme, which was struck down by the High Courts. Thus, all the employees who did not exercise the option but are entitled to do so, but could not due to the interpretation of the cut-off date, be given some adjustment,” it stated.
Under the pre-revision scheme, the pensionable wage was calculated as the common of the wage acquired through the 12 months previous to exit from the pension fund’s membership. The amendments prolonged it to a median of 60 months earlier than exiting pension fund membership.
The Supreme Court concurred with the modifications and stated that “we do not find any fault in making the change in the basis of calculation of pensionable salary”. The court docket, nevertheless, amended the modification to require members to contribute a further 1.16 per cent of their wage exceeding Rs 15,000 monthly, as a violation of the provisions of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.
The Supreme Court stated, “Since the (1952) Act does not consider any contribution by an employee to remain in the scheme, the Central Government itself cannot mandate such a condition under the scheme.” It might achieve this solely by means of a legislative modification, it stated.
“At the same time, we cannot ignore the fact that the pension amount to be paid has been calculated on the assumption that the corpus will include the option of additional contribution of 1.16 per cent of the employees. We cannot compel the central government to contribute to the pension scheme in the absence of a legislative provision to this effect. It would be up to the administrators to rearrange the contribution pattern within the purview of the statute and a possible solution could be to raise the level of employer contribution to the scheme,” the Supreme Court stated.
The bench stated it’s suspending the operation of this a part of the judgment for six months “so that the legislature may consider the need to bring appropriate legislative amendments in the matter”.
Experts stated the federal government shouldn’t change the prevailing distribution between provident fund and pension. “The receipt of (pension) was increased within the earlier regime. The authorities’s argument was that employees in any respect ranges ought to have extra liquidity, which the commerce unions are opposing. Instead of the federal government taking the choice, the employees ought to take the choice. The authorities ought to present extra choices to the employee – whether or not he ought to go for the previous system of upper provident fund or increased annuity – and it shouldn’t tinker with the prevailing distribution between PF and pension,” stated KR Shyam Sundar, labor economist and Professor Xavier School of Management Jamshedpur at XLRI stated.
With inputs from TheIndianEXPRESS
