For nearly 70 lakh pensioners, the agonizing wait for higher pension under the Employees’ Pension Scheme (EPS), 1995 seems to have no end in sight, even though it has been over two months as reiterated by the Supreme Court of India, in principle Approval of the idea of higher pension.
A circular issued in late December by the Employees’ Provident Fund Organization (EPFO), which is the administrative body for EPS, has only added to the pain experienced by pensioners. While it is seen as a follow-up to the Court’s judgment where the EPFO was asked to implement the Court’s October 2016 directions as well, the circular only covers a section of pensioners – that too subject to certain conditions .
It all started in early 2005 when a section of Himachal Pradesh Tourism Development Corporation employees demanded higher pension on the eve of their retirement. As his employer had made a mandatory contribution of 12% on his actual salary, which was over and above the statutory limit, he would be entitled to the benefit of depositing 8.33% of his actual salary in the Pension Fund. But the EPFO was not affected as the employees did not exercise their option with their employer within the cut-off date. Eventually the matter went to the Supreme Court.
In October 2016, the apex court rejected EPFO’s notion of cut-off date and said that the cut-off date, as in the EPS rules, was only for computing the pensionable salary. An estimate shows that 24,672 pensioners got the benefit of higher pension.
Meanwhile, with effect from September 1, 2014, the Center made some changes to the EPS, which pertained to limiting the applicability of the scheme to those earning monthly pensionable wages up to ₹15,000; New basis for determination of pensionable wages and requirement of employees and employers to give a new option within six months and extendable by six months on contributions in excess of the statutory limit (now ₹15,000) after three High Courts struck down the amendments After, the matter again went to the Supreme Court.
Broadly upholding the revised scheme, the Court strengthened its rejection of the principle of cutoff date for giving option, in November 2022, and asked the EPFO to give four months to those who, on September 1, Was a member till 2014. Use the option. Also, the retirement fund body was to implement the October 2016 decision in eight weeks. Hence the December circular.
influential situations
The circular has irked pensioners, who had expected “manna from heaven” after the November 2022 verdict. But the circular, citing a 2016 judgement, sought to narrow down the scope of coverage of beneficiaries with the imposition of three conditions: payment of contribution on higher or actual wages; Exercise of joint option during service, and refusal by EPFO to allow higher pension.
A section of pensioners contends that the authorities did not allow such persons to exercise their option for about 12 years (starting from December 2004) while in service, during which period the question of exercising the option does not arise – That is why they have been abandoned. Moreover, post-2014 retirees – who are 58 years after September 1, 2014 – are clueless about their plight. Another circular is likely to be issued by the EPFO to clear the air.
The main reasons behind the reluctance of PF authorities to allow higher pension are apprehensions over the stability of pension funds and the scenario of cross-subsidised pension payments to those earning or likely to receive higher pension . , In addition, factors such as rising actuarial deficit, low rate of return and increasing longevity of pensioners may result in pension payments exceeding receipts. According to EPFO it will be against social security.
no clarity
But what the authorities should keep in mind is that a lot of confusion among the pensioners could have been avoided if they were proactive in sharing the information or explaining the situation to the people concerned. For nearly two months after the November verdict, the EPFO remained silent about the action. At the same time, there is no clarity even after the December circular.
On the policy front, the government and the EPFO should increase the minimum monthly pension to Rs 3,000 from the existing Rs 1,000. The increase in pension would go a long way in addressing the grievances of those pensioners who were in the lower pay bracket. Further, EPFO may give one time opportunity to all those in the higher pay group who have retired since December 2004 without exercising the option. To convert all these suggestions into reality, the government should substantially increase its financial assistance. Also, once the Social Security Code, 2020 comes into force, there could be a scheme for those youths who got jobs after September 2014, who are left out of EPS due to their high wages. All these measures will only establish that the government and EPFO are serious about providing social security.
ramakrishnan.t@thehindu.co.in