EPFO Circular in matter of Special Leave Petition on subject of Higher Wages Pensions

The Employees Provident Fund Organisation(EPFO) has issued Circular on Special Leave Petition on subject of Higher Wages Pensions.

The Circular Stated, “Hon’ble Supreme Court and directions of the Central Government directed as – The field offices should implement the directions contained in Para 44(iii) & (iv) read with Para 44(v) of the judgement dated 04.11.2022 of the Hon’ble Supreme Court within the stipulated timeline”

As may be seen, the Hon’ble Supreme Court has pronounced judgement dated 04.11.2022 in the matter of Special Leave Petition (C) Nos. 8658-8659 of 2019. The relevant directions of the Court with respect to the above-mentioned subject are as follows:

“44 (iii) 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”.

“44(iv) The 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) would be entitled to exercise option under paragraph 11 (4) of the post amendment scheme. Their right to exercise option before 1st September 2014 stands crystallised in the judgment of this Court in the case of R.C. Gupta (supra). The scheme as it stood before 1st September 2014 did not provide for any cut-off date and thus those members shall be entitled to exercise option in terms of paragraph 11 ( 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. There was uncertainty as regards validity of the post amendment scheme, which was quashed by the aforesaid judgments of the three High Courts. 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. We are giving this direction in exercise of our jurisdiction under Article 142 of the Constitution of India. Rest of the requirements as per the amended provision shall be complied with”.

“44 (v) The employees who had retired prior to 1st September 2014 without exercising any option under paragraph 11 (3) of the pre-amendment scheme have already exited from the membership thereof. They would not be entitled to the benefit of this judgment.”

Accordingly, the employees 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) would be entitled to exercise joint option under erstwhile para 11 (3) & existing para 11 (4) within the aforesaid extended period of four months. The employees who had exercised option under Para 11 (3) of EPS 1995 and continued to be in service on or after 01.09.2014 will be guided by the amended provisions of paragraph 11 (4) of the pension scheme, i.e. if they had not exercised the option within the time specified under Para 11 (4), such employees shall not be eligible to exercise option within the extended period of four months.

Therefore, in compliance of the Hon’ble Supreme Court judgement dated 04.11.2022, following employees with their employers may submit joint option under para 11 (3) and 11 (4) to the concerned Regional Office:

i. The employees and employers who had contributed under paragraph 26(6) of EPF Scheme on salary exceeding the prevalent wage ceiling of Rs 5000/- or 6500/-; and

ii. did not exercise joint option under the proviso to Para 11 (3) of the pre-­amendment scheme (since deleted) while being members of EPS,95; and

iii. were members prior to 01.09.2014 and continued to be a member on or after 01.09.2014.

The manner in which such employees would apply to the concerned Regional Office is as follows:

i. The request will be made in such form and manner, as may be specified by the Commissioner.

ii. The joint option will contain the disclaimer and declaration as may be specified therein.

iii. In case of share requiring adjustment from Provident Fund to Pension Fund, and if any re-deposit to the fund, explicit consent of the employee will be given in the joint option form.

iv. In case of transfer of funds from exempted provident fund trust to pension fund of EPFO, an undertaking of the trustee shall be submitted. The undertaking shall be to the effect that due contribution along with interest up to the date of payment, will be deposited within the specified period.

v. In case of employees of unexempted establishments, refund of requisite employer’s share of contribution, the same shall be deposited with interest at the rate declared under Para 60 of EPF Scheme, 1952, till the date of actual refund.

vii. The method of deposit and that of computation of pension will follow through subsequent circular.

vii. Aforesaid joint option must contain the proof of remittance of employer’s share in Provident Fund on higher wages exceeding the prevalent wage ceiling of Rs. 5,000/6,500 and proof of joint option under Para 26(6) of EPF Scheme duly verified by the employer.

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