Madras HC sets aside EPFO circular, clears path for higher pension claims
New Delhi, Sep 9, 2025
The Madurai bench of Madras HC has struck down an EPFO circular that blocked retrospective PF trust rule changes, enabling employees of exempted firms to seek higher pensions
The Madurai bench of Madras High Court on 2 September set aside an Employees’ Provident Fund Organisation (EPFO) circular dated 18 January that disallowed firms managing their own provident fund (PF) trusts from amending their rules retrospectively to enable members to claim higher pensions. The circular had followed a Supreme Court judgment of November 2022 that allowed eligible workers to receive higher pensions.
“The circular issued by the respondents [EPFO] on January 18 cannot be a violation of the order passed by the Supreme Court in the Sunil Kumar case, the same is liable to be set aside,” the High Court order stated.
In its November 2022 ruling, the Supreme Court had allowed eligible employees who were in service on 1 September 2014 to opt for pension on higher wages by contributing 8.33 per cent of their actual salary if it exceeded the monthly ceiling of Rs 15,000.
B. N. Agrawal, Secretary, SAIL-BSP Pensioners’ Association, said many joint options exercised by employees and employers have been rejected by the EPFO on what he described as “lame excuses”, including the wage ceiling in the trust rules of most exempted establishments. Exempted firms under the EPF Act are companies that manage their employees’ PF in-house. However, a large number of joint options from other exempted establishments without such ceilings in their rules have been accepted by the PF office.
The HC order now allows any joint option application for availing pension on higher wages submitted on or before 31 January this year to be accepted by the EPFO. The court said trust rules framed under the EPF Scheme cannot be cited to deny benefits under the Employees’ Pension Scheme (EPS) 1995.
It further held that establishments have not been exempted under Para 39 of the EPS 1995. “The conditions for the exemption granted to the PF Scheme cannot be invoked to deny the benefits to an employee under the statutory pension scheme. The exemption has been granted for provident fund, not the pension scheme, and the employees are integral parts of the statutory pension scheme and fund maintained by the EPFO, independent of exempted firms’ trust rules,” Agrawal said.
The Madurai bench was hearing a case filed in October 2024 by 86 retired employees of Bharat Heavy Electricals Limited (BHEL) Trichy, challenging EPFO orders issued to individual employees on 21 March 2024 recalling a demand notice for payment of EPS contributions along with interest to avail higher pensions.
The petitioners also challenged a subsequent EPFO circular that barred retrospective amendments to PF trust rules.
The EPFO had argued that exempted establishments are governed by their trust rules rather than the EPF Scheme, and that employees had opted for a larger provident fund over a larger pension. It also contended that granting higher pensions would result in financial loss to the organisation.
[The Business Standard]
