Instruction in compliance of orders contained in Para 44 (ix) read with Para 44 (v) & (vi) of Hon’ble Supreme Court judgment dated 04.011.2022″

EPFO vide Circular No. “Ho No. Pension/2022/54877/15149 dated 29/12/2022” issued “Instruction in compliance of orders contained in Para 44 (ix) read with Para 44 (v) & (vi) of Hon’ble Supreme Court judgment dated 04.011.2022 in the matter of Special Leave Petition © Nos. 8658-8659 of 2019”.

Please note that the Hon’ble Supreme Court had passed a Judgment on 04/11/2022 (judgment enclosed) in the matter of Employees Pension Scheme 1995 (EPS) determining the legality of the amendments and modifications made by the Central Government in the year 2014.

Just for your information, Vide amendment of 2014 (notification enclosed), the following modifications were made –

• the pensionable salary was further increased to Rs. 15,000/- (from Rs. 6500/-).
• As per paragraph 3(ii) of the pension scheme, the Central Government was to contribute to the fund at the rate of 1.16 % of the pay of the members. Employees within the changed pension regime drawing more than Rs.15000/- per month have to also contribute at the rate of 1.16 % on salary   exceeding Rs.15000/- as additional contribution each month under the amended provisions.
• Fresh option was to be exercised by the member within a period of six months from the 1st day of September 2014, which was extendable up to about 6 months on sufficient cause shown by the member.
• The fourth proviso to sub-clause (4) of paragraph 11 specifies that if no option is exercised by a member within the aforesaid period, it would be deemed that the concerned member has not opted for contribution over the wage ceiling. In such a case, the contributions to the pension fund made beyond the wage limit in respect of such a member is to be diverted to the provident fund account of the member along with interest, as declared under the provident fund scheme from time to time.

Issues discussed in the Judgment –

• Fifty-four writ petitions have been filed by the employees themselves or on their behalf under Article 32 of the Constitution of India vide which “the legality of the modified scheme was questioned in different writ petitions in different High Courts seeking invalidation of the notification numbered G.S.R. 609 (E)], which was to be effective from 1st September 2014 dated 22nd August 2014 vide which the Pensionable salary was raised to Rs.15000/- from 6500/- and certain other modifications were also made to the provisions of the scheme.” The Bench decisions of the High Courts of Kerala, Rajasthan and Delhi went in favour of the employees and set aside the Employees’ Pension Amendment (Scheme), 2014 conceived in G.S.R. 609 (E). Hence the appeal before the Hon’ble Supreme Court by the EPFO.

COURT HELD / JUDGMENT – The validity of the Employees’ Pension Amendment Scheme, 2014, has been upheld by the Hon’ble the Supreme Court. However the Hon’ble court has opined that the requirement of members to contribute at the rate of 1.16% of their salary to the extent such salary exceeds Rs 15000  per month as an additional contribution under the amended scheme is ultra vires the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and hence the Bench suspended the operation of this part of the order for a period of six months.

• Further “the question of entitlement of members of the pension scheme, whose pensionable salary exceeded Rs.6500/per month to exercise option in terms of proviso to paragraph 11 (3) of the scheme” has also been discussed in this judgment.

COURT HELD / JUDGMENT – The Bench held that the employees who had exercised option under the proviso to paragraph 11(3) of the 1995 scheme and continued to be in service as on 1st September 2014, will be guided by the amended provisions of paragraph 11(4) of the pension scheme. For those members of the scheme, who did not exercise option, as contemplated in the proviso to paragraph 11(3) of the pension scheme (as it was before the 2014 Amendment), the Bench observed that they would be entitled to exercise option under paragraph 11(4) of the post amendment scheme. The scheme as it stood before 01.09.2014 did not provide for any cutoff date and thus those members shall be entitled to exercise option in terms of paragraph11(4) of the scheme, as it stands at present. Their exercise of option shall be in the nature of joint options covering pre-amended paragraph 11(3) as also the amended paragraph 11(4) of the pension scheme. Thus, all the employees who did not exercise option but were entitled to do so but could not due to the interpretation on cut-off date by the authorities, ought to be given a further chance to exercise their option. Time to exercise option under paragraph 11(4) of the scheme, under these circumstances, shall stand extended by a further period of four months.

As per the Bench, the employees who had retired prior to September 1, 2014 without exercising any option under paragraph 11(3) of the pre-amendment scheme had already exited from the membership thereof,  would not be entitled to the benefit of this judgment. However, the employees who have retired before September 1, 2014 upon exercising option under paragraph 11(3) of the 1995 scheme shall be covered by the provisions of the paragraph 11(3) of the pension scheme as it stood prior to the amendment of 2014.

• Another issued to be determined is “whether the members from an exempted establishment under the 1952 Act would be entitled to the benefits of enrolling in the scheme beyond the ceiling limit?”

COURT HELD / JUDGMENT – The Bench opined that the amendment to the pension scheme brought about by the notification dated August 22, 2014 would apply to the employees of the exempted establishments in the same manner as the employees of the regular establishments.

In furtherance of the Judgment EPFO HO issued this Circular comprising Instructions in compliance with the said Supreme Court Judgment clarifying as to which pensioners may apply online for validating their options, how to apply to the concerned regional office and in what manner are the applications to be dealt by the Regional PF Commissioner.

EPFO Circular_ 29.12.2022- Instruction on SC judgment dated 4.11.2022 [Pension-2022-54877-15149]

9610_2019_13_1501_39472_Judgement_04-Nov-2022

Employees’ Pension (Amendment) Scheme, 2014_Acturial_WageCeiling_7738