caalley logo

Welcome to the one-stop destination for Indian Chartered Accountants and other finance professionals

EPFO plans explainer to ‘demystify’ SC order on higher pensions

New Delhi, Mar 16, 2023

Facing backlash from the public over procedural complexities in applying for higher pension, the Employees’ Provident Fund Organisation plans to release a detailed explainer to “demystify” the Supreme Court’s November 4 judgment on higher pension and said it is “totally open to receiving all claims”.

The Pension Implementation and EDLI Committee (PIEC), a sub-committee the EPFO’s Central Board of Trustees (CBT), at its meeting on Wednesday, expressed concerns over the labour ministry’s submission to a parliamentary panel that its budget estimates for 2023-24 were prepared without factoring in the implications of the apex court’s judgment. This, it said, is likely to impact EPFO’s rate of interest for 2022-23, which is to be decided at the CBT’s next meeting on March 27-28.

“The EPFO rate of interest depends on the financial health of the retirement fund. If the labour ministry says it has not factored in the implications of the apex court judgment on pension payout, it also means the impact on the retirement fund is unclear,” Michael Dias, member CBT and PIEC, told TOI.

The ministry had told a parliamentary panel that “the budget proposal of RE 2022-23 and BE 2023-24 was prepared in September 2022 without taking into account the normal growth of the membership/contribution under EPS-95. The judgment of Hon’ble Supreme Court on Employee Pension Scheme was received in November 2022. Therefore, its implications are not factored into the BE 2023-24 allocation”.

Separately, junior labour minister Ramesh war Teli also told Lok Sabha that the ministry is “examining” the implementation of the SC judgment.

“It has legal, financial, actuarial and logistical implications. All pension funds have to be sustainable for the future generations therefore, in larger public interest and that of social security it is imperative that the pension funds are kept in good financial health so that pension payment liabilities in future are met,” the minister said.

The decision to issue detailed FAQs, meanwhile, comes on the back of procedural complexities and lack of clarity in EPFO’s guidelines that has made it nearly impossible for subscribers to register for the joint option for higher pension and to meet the eligibility criteria laid down by the retirement fund manager.

“The issues related to the confusion among subscribers was taken up at the meeting and it was decided that EPFO will release a set of Frequently Asked Questions (FAQs) to demystify the Supreme Court judgement,” Dias said.

The meeting, held under the helmsmanship of Central PF Commissioner Neelam Shami Rao, also decided that EPFO is “totally open to receiving all claims” and that once these details have been received, any related issues will be examined.

EPFO has received 93,952 applications for validation from EPFO subscribers who retired before September 1, 2014, and whose applications for joint option for higher pension had earlier been rejected by the pension fund manager.

As on March 10, EPFO has received 29,541 applications from subscribers who were in service on or after September 1, 2014. The validity of the applications, however, remains unclear.

[The Times of India]

Read more on:
Don't miss an update!
Subscribe to our newsletter