Employee Pension Scheme: A decision of the Supreme Court can increase the pension of private sector employees by more than 300%.
Employee Pension Scheme: Private sector employees can get relief soon in the Supreme Court. In fact, due to the decision of the Supreme Court, the pension (EPS) of lakhs of employees contributing to the Employees’ Provident Fund (EPF) can increase by 300% in one stroke. The Employees’ Provident Fund Organization (EPFO) has fixed the maximum salary for the pension of employees at Rs 15,000 (Basic Salary). Meaning, even if your salary is more than Rs 15,000 per month, but your pension will be calculated only on the maximum salary of Rs 15,000.
One decision and pension will increase manifold
Now the Supreme Court can abolish this salary-limit of EPFO. The matter is sub-judice and the hearing is going on continuously. Employees’ pension can also be calculated on the last pay i.e. higher pay bracket. With this decision, the employees will get many times more pension.
Let us tell you, to get the pension, it is necessary to contribute to the Employees’ Provident Fund (EPF) for 10 years. At the same time, on completing 20 years of service, a weightage of 2 years is given. If the Supreme Court decides to remove the limit, then how much difference will it make, let’s understand it…
How will your pension increase, know- here?
According to the existing system, if an employee is working from June 1, 2015 and wants to take pension after completing 14 years of service, then his pension will be calculated at Rs 15,000 only, irrespective of the number of years for which he has been working. have been 20 thousand rupees should be in the basic salary bracket or 30 thousand rupees. According to the old formula, the employee will get a pension of about Rs 3000 from June 2, 2030, on completion of 14 years. The formula for calculation of pension is- (Service Historyx15,000/70). But, if the Supreme Court decides in favor of the employees, then the pension of that employee will increase.
Suppose the salary (Basic Salary + DA) of an employee is 20 thousand rupees. Calculating from the pension formula, his pension will be Rs.4000 (20,000X14)/70 = Rs.4000. Similarly, higher the salary, higher will be the benefit of pension. There can be a jump of 300% in the pension of such people.
Suppose the job of an employee is 33 years. His last basic salary is 50 thousand rupees. Under the current system, pension was calculated on a maximum salary of Rs 15,000. In this way (Formula: 33 years+2= 35/70×15,000) the pension would have been only Rs 7,500. This is the maximum pension in the current system. But, after removing the pension limit, adding the pension according to the last salary, they will get a pension of 25000 thousand rupees. Means (33 years+2= 35/70×50,000= Rs 25000).
Let us tell you, according to the rules of EPFO, if an employee contributes to the EPF continuously for 20 years or more, then two more years are added to his service. In this way 33 years of service was completed, but pension was calculated for 35 years. In such a situation, the salary of that employee can increase by 333 percent.
What is the whole matter?
The Employees’ Pension Revision Scheme, 2014 was implemented by the Central Government from 1st September 2014 by issuing a notification. This was opposed by the private sector employees and in the year 2018 it was heard in the Kerala High Court. All these employees were covered by the facilities of the EPF and Miscellaneous Provisions Act, 1952. The employees protested against the EPFO’s rules saying that it ensures them less pension, because even if the salary is more than 15 thousand, the calculation of pension has been fixed at the maximum salary of 15 thousand rupees.
However, before the amendment made by the central government on September 1, 2014, this amount was Rs 6,500. Considering the rules of EPFO to be unfair, the Kerala High Court had given the decision while accepting the writ of the employees. On this, the EPFO filed an SLP in the Supreme Court, which was rejected by the Supreme Court.
Decision came in 2019
The Supreme Court decided to hear its decision again. A division bench of Justice Surendra Mohan and Justice AM Babu, while hearing the SLP of EPFO on 1st April 2019, observed that the employees who are contributing on the basis of their actual salary, are depositing as a joint option with their employers. Huh. They are deprived of the benefits of the pension scheme without justification if deemed necessary. There is no justification for fixing the pension salary at Rs 15,000.
In the latest case, the bench said that 15 thousand monthly i.e. five hundred rupees per day. It is well known that even a daily wage earner gets more salary than this. Hence limiting the maximum salary for pension.
15,000 thousand will deprive most of the employees of a decent pension in old age. As regards the impact on the Pension Fund, the fund should be managed by increasing the rates of contribution from time to time.
Case still pending
In January 2021, the Supreme Court reconsidered its decision of 2019 and decided to hear the matter. The matter is being heard continuously since August 17. Actually, a petition was filed against the order of the Kerala High Court on behalf of the Ministry of Labor and EPFO. EPFO believes that with this order, pension can increase up to 50 times (EPS upper limit). On August 25, a bench of Justice UU Lalit and Justice Ajay Rastogi, while hearing the matter, decided to refer the matter to a larger three-member bench. The case is still pending.