Employee’s Pension Scheme: The Employees’ Pension Revision Scheme, 2014 was implemented by the Central Government from September 1, 2014 by issuing a notification.
Employee’s Pension Scheme: Private sector employees can get relief soon. With a decision, 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 of 15 thousand rupees (basic salary) for the pension of the employees. Meaning, even if your salary is more than 15 thousand rupees a month, but your pension will be calculated only on the maximum salary of 15 thousand rupees.
One decision and pension can increase manifold
Hearing is going on in the Supreme Court to eliminate this salary-limit of EPFO. The calculation of the employees’ pension (Employee’s Pension Scheme) can also be done on the last salary i.e. high salary 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 on removing the limit, then how much difference will it make, let’s understand…
How will your pension increase?
According to the existing system, if an employee is doing a job since June 1, 2015 and if he wants to take pension after completing 14 years of service, then his pension would be calculated at Rs 15 thousand only, even if he was working for Rs 20 thousand. Be in the basic salary bracket or 30 thousand rupees. According to the old formula, on completion of 14 years, the employee will get a pension of about 3000 rupees from June 2, 2030. 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 the same employee will increase.
Example No.1
Suppose the salary of an employee (Basic Salary + DA) is at 20 thousand rupees. Calculating with the formula of pension, his pension will be Rs.4000 (20,000X14)/70 = Rs.4000. Similarly, the higher the salary, the more he will get the benefit of pension. There can be a jump of 300% in the pension of such people.
Example No.-2
Suppose the job of an employee is 33 years. His last basic salary is 50 thousand rupees. Under the current system, the calculation of pension would have been done only on the maximum salary of 15 thousand rupees. In this way (Formula: 33 Years+2= 35/70×15,000) the pension would have been Rs 7,500 only. This is the maximum pension in the current system. But, after removing the pension ceiling, adding 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).
Pension can increase up to 333%!
Let us tell you that 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 by issuing a notification from September 1, 2014. This was opposed by the employees of the private sector 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 rules of EPFO, saying that it ensures less pension to them.
Because even if the salary is more than 15 thousand, but the calculation of pension has been fixed on 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 as unjustified, the Kerala High Court had given the verdict by 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 was pronounced 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 April 1, 2019, observed – Employees, who are contributing on the basis of their actual wages after furnishing a joint option with their employers as deemed necessary. are, they are deprived of the benefits of the pension scheme without justification. There is no justification for fixing the salary for pension to 15 thousand rupees. The bench said that 15 thousand monthly means 500 rupees per day. It is common knowledge that even a daily wage laborer gets paid more than this. So limiting the maximum salary for pension to Rs 15000 thousand will deprive most of the employees of a decent pension in old age. As far as the impact on the pension fund is concerned, there should be a provision for the fund by increasing the rates of contribution from time to time.
Re-Hearing
In January 2021, the Supreme Court reconsidered its decision of 2019 and decided to hear the matter. A petition was filed against the order of the Kerala High Court on behalf of the Labor Ministry and EPFO. EPFO believes that with this order the 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 three-member larger bench. The matter is still pending.
