retirement fund body EPFO is considering to introduce a new pension product for organized sector workers drawing basic wages of more than Rs. 15,000 per month and is not necessarily covered under its Employees Pension Scheme 1995 (EPS-95).
At present, all those employees of the organized sector whose basic salary (basic pay plus dearness allowance) is up to 15,000 per month at the time of joining the service are compulsorily covered under EPS-95.
“There has been a demand for higher pension on higher contribution among the members of the Employees’ Provident Fund Organization (EPFO). Thus, it is being actively considered to bring a new pension product or scheme for those whose monthly is more than the basic salary 15,000,” said a source close to the development. PTI,
According to the source, the proposal on this new pension product may come up for discussion in the meeting of the EPFO’s apex decision-making body Central Board of Trustees (CBT) in Guwahati on March 11 and 12.
During the meeting, a sub-committee set up by the CBT on pension related issues in November 2021 will also submit its report.
The source said that there are some subscribers of EPFO who are getting more than this. 15,000 monthly basic pay who are forced to contribute less (at the rate of 8.33 per cent) 15,000 per month in EPS-95) and thus they get less pension.
EPFO had amended the scheme in 2014 to limit the monthly pensionable basic pay 15,000.
threshold of 15,000 only applicable at the time of joining the service. it was modified from above 6,500 with effect from 1st September 2014 in view of price hike and wage revision in the formal sector.
Later, there was a demand and deliberation to increase the ceiling of monthly basic pay 25,000, but the proposal was not approved.
According to industry estimates, the increase in pensionable wages could have brought 50 lakh more formal sector employees under the EPS-95.
“Proposal for increase in salary limit” 15,000 per month to 25,000 per month has been deposited by the Employees’ Provident Fund Organization (EPFO) for coverage under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. No decision has been taken in this regard,” former Labor Minister Bandaru Dattatreya said in a written reply in the Lok Sabha in December 2016.
The source said there is a need for a new pension product for those who are either forced to contribute less or who could not subscribe to the scheme as their monthly basic salary was more than this. 15,000 at the time of joining the service.
The source said that no step has been taken by the EPFO to increase the pensionable salary limit in the immediate future and in that scenario, the body will have to think of giving coverage to those formal sector employees who are eligible for EPS due to higher salaries. -95 out. basic salary.
The issue of pensionable salary limit is also sub-judice in the Supreme Court. In 2014, the Kerala High Court allowed employees to contribute to EPS-95 based on the actual basic pay drawn by them.
In April 2019, the apex court had dismissed a special leave petition filed by the EPFO against the decision of the Kerala High Court. In January 2021, the top court withdrew the dismissal order in the review petitions filed by the EPFO.
In February 2021, the apex court restrained the High Courts of Kerala, Delhi and Rajasthan from initiating contempt proceedings against the Center and the EPFO for non-implementation of their decisions.
This story has been published without modification in text from a wire agency feed. Only the title has been changed.
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