As per the Supreme Court verdict, EPFO should provide a pension based on actual salary for employees and companies who choose to opt for it. A transfer of funds should be made to accommodate this by EPFO. Can anyone clarify whether this is applicable for Exempted Funds?
From India, Kolkata
6From India, Kolkata
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This ruling applies only to employees of the establishments who have paid the PF contributions on actual salary without restricting the PF qualifying salary to Rs 6500.
For example, XYZ Ltd is an establishment which used to contribute the employer's share of PF on the actual salary. Mr B's PF qualifying salary was Rs 10,000, and the employer's share of 12% was deposited like this: Rs 541 (8.33% of Rs 6500) to the Pension Fund and the balance Rs 659 (i.e., 1200 minus 541) to PF along with the employee's share of Rs 1200. This means that although the employer's share was Rs 1200, the employer was only permitted to contribute Rs 541 to the Pension Fund. At the same time, he had contributed a higher amount to the Provident Fund, i.e., Rs 659 as against Rs 367 (3.67% of Rs 10,000).
As per the Supreme Court verdict, the PF Organization will have to rearrange the funds by transferring the additional amount of Rs 292 (Rs 659 minus Rs 367) from the PF account to the Pension account so that the Pension Fund will become equal to 8.33% of Rs 10,000 or Rs 833 (i.e., 541 already deposited plus Rs 292 now being transferred). By doing this, the Provident Fund will become Rs 367. If you have already withdrawn the PF, i.e., Rs 659, obviously with your own share of Rs 1200, you have to refund Rs 292 to the Provident Fund Organization, who will put this amount in your Pension Fund account to recalculate your pension.
Formerly, the Pension qualifying salary was Rs 6500, but since the employer had contributed PF on a higher salary, i.e., Rs 10,000, this will become the Pension qualifying salary. Obviously, the pension will increase. If your PF qualifying salary had been even higher, say Rs 60,000 or Rs 100,000, the pension would also go up.
However, with the last amendment of 2014, the PF Organization has put a ceiling on the pension contributing salary to Rs 15,000. Since then, this has become Rs 15,000. With this amendment, the pension calculating formula has also been changed. Now, the actual contribution or Rs 15,000, whichever is lower, will be the base for pension calculation, and for the period prior to September 2014, the average of the pension qualifying salary for 5 years will also be taken. In this calculation, we can make use of the Supreme Court verdict and put the same PF contributed salary as the Pension qualifying salary.
I must say that employees of establishments who do not even think of giving PF to their employees and those who give it just for statutory compliance will not get the benefit of the verdict because they will contribute just what the law states, i.e., contribute PF on Rs 6500 or Rs 15,000, as the case may be.
From India, Kannur
For example, XYZ Ltd is an establishment which used to contribute the employer's share of PF on the actual salary. Mr B's PF qualifying salary was Rs 10,000, and the employer's share of 12% was deposited like this: Rs 541 (8.33% of Rs 6500) to the Pension Fund and the balance Rs 659 (i.e., 1200 minus 541) to PF along with the employee's share of Rs 1200. This means that although the employer's share was Rs 1200, the employer was only permitted to contribute Rs 541 to the Pension Fund. At the same time, he had contributed a higher amount to the Provident Fund, i.e., Rs 659 as against Rs 367 (3.67% of Rs 10,000).
As per the Supreme Court verdict, the PF Organization will have to rearrange the funds by transferring the additional amount of Rs 292 (Rs 659 minus Rs 367) from the PF account to the Pension account so that the Pension Fund will become equal to 8.33% of Rs 10,000 or Rs 833 (i.e., 541 already deposited plus Rs 292 now being transferred). By doing this, the Provident Fund will become Rs 367. If you have already withdrawn the PF, i.e., Rs 659, obviously with your own share of Rs 1200, you have to refund Rs 292 to the Provident Fund Organization, who will put this amount in your Pension Fund account to recalculate your pension.
Formerly, the Pension qualifying salary was Rs 6500, but since the employer had contributed PF on a higher salary, i.e., Rs 10,000, this will become the Pension qualifying salary. Obviously, the pension will increase. If your PF qualifying salary had been even higher, say Rs 60,000 or Rs 100,000, the pension would also go up.
However, with the last amendment of 2014, the PF Organization has put a ceiling on the pension contributing salary to Rs 15,000. Since then, this has become Rs 15,000. With this amendment, the pension calculating formula has also been changed. Now, the actual contribution or Rs 15,000, whichever is lower, will be the base for pension calculation, and for the period prior to September 2014, the average of the pension qualifying salary for 5 years will also be taken. In this calculation, we can make use of the Supreme Court verdict and put the same PF contributed salary as the Pension qualifying salary.
I must say that employees of establishments who do not even think of giving PF to their employees and those who give it just for statutory compliance will not get the benefit of the verdict because they will contribute just what the law states, i.e., contribute PF on Rs 6500 or Rs 15,000, as the case may be.
From India, Kannur
Thank you for your valuable update. Is there any difference between PF funds managed by EPFO and PF funds managed by Trustees? Currently, EPFO is not allowing companies whose PF is managed by Trustees to be included under the purview of the Higher pension ruling. They are only permitting unexempted establishments. Could you please provide further insight into this issue?
From India, Kolkata
From India, Kolkata
The present ruling does not make it applicable to members of exempted establishments. But there will be direction in this regard very soon.
From India, Kannur
From India, Kannur
Dear Madhuji,
Thank you very much for your valuable information. I have been drawing a pension under the EPF & MP Act w.e.f. 01/07/2014. My PF salary (earning) on which PF contribution was being deducted prior to my retirement was much higher than the pension wage ceiling (It was Rs. 6500/- at the time of my retirement). Is there any circular issued by the PF authority inviting applications from PF pensioners for claiming a pension on the actual PF wage by depositing the differential pension contribution? Can you please enlighten me in this regard?
Thanking you, With Regards,
S.K. Hota
From India, Calcutta
Thank you very much for your valuable information. I have been drawing a pension under the EPF & MP Act w.e.f. 01/07/2014. My PF salary (earning) on which PF contribution was being deducted prior to my retirement was much higher than the pension wage ceiling (It was Rs. 6500/- at the time of my retirement). Is there any circular issued by the PF authority inviting applications from PF pensioners for claiming a pension on the actual PF wage by depositing the differential pension contribution? Can you please enlighten me in this regard?
Thanking you, With Regards,
S.K. Hota
From India, Calcutta
PF Organisation is keeping silent on these matters. Yesterday, the Supreme Court has said that we should wait until the cases pending in Kerala High Court are decided. I think we may have to wait for another couple of months to get clarity.
From India, Kannur
From India, Kannur
EPFO has already issued a circular on 23.03.2017 which is attached. However, regional offices are going slow on this, citing a lack of gazette publication and verdicts on some more cases pending in courts. However, they have to ultimately pay the revised pension. The court, in the order, has already reprimanded EPFO for harassing subscribers. EPFO goes on the assumption that their function is to deny benefits to the subscribers, whereas it should be to give as much benefit to subscribers as possible.
Though the Supreme Court order does not distinguish between exempted and non-exempted categories, EPFO is illegally trying to exempt the 'exempted category' (the funds managed by the employers themselves), since the Supreme Court order is specific on giving benefits to all; it is only a matter of time that EPFO stops this illegal discrimination. Various pensioners' organizations have already taken this up, and an online petition to the Labour Minister is ongoing. I request everyone on this board to google the petition and sign it.
Increased pension is also applicable to those who are already drawing a pension. As per the circular, there is a specified form which is not available online but has to be obtained from local EPF offices. Currently, in line with EPFO's mindset, they are insisting that only those who apply will be considered, and unofficially they are also banking on pensioners not being able to pay the EPS contribution already returned along with EPF accumulation. This difference will have to be first paid to EPFO, but since arrears of pension they have to give will far exceed the excess contribution, it is only common sense to deduct the excess contribution from arrears and pay the balance, but EPFO's mindset will not allow that, and we may have to approach courts again for that. In short, there could be delays, but EPFO will be forced to implement the court order; maybe EPFO may go bankrupt in the long run or may have to depend on Government funding. The government will be forced because the government only passed the law which the SC has rightly interpreted now. I request everyone on this board, pensioners, and those who are still employed to go for it. Pensioners, go to the local office and submit the specified form based on which EPFO will inform you about the excess contribution to be paid, and EPFO will pay you arrears starting from the commencement of your pension. Please remember that your spouse/nominee will get half the enhanced pension; just go for it. Next week I will post the specified form.
From India, Thane
Though the Supreme Court order does not distinguish between exempted and non-exempted categories, EPFO is illegally trying to exempt the 'exempted category' (the funds managed by the employers themselves), since the Supreme Court order is specific on giving benefits to all; it is only a matter of time that EPFO stops this illegal discrimination. Various pensioners' organizations have already taken this up, and an online petition to the Labour Minister is ongoing. I request everyone on this board to google the petition and sign it.
Increased pension is also applicable to those who are already drawing a pension. As per the circular, there is a specified form which is not available online but has to be obtained from local EPF offices. Currently, in line with EPFO's mindset, they are insisting that only those who apply will be considered, and unofficially they are also banking on pensioners not being able to pay the EPS contribution already returned along with EPF accumulation. This difference will have to be first paid to EPFO, but since arrears of pension they have to give will far exceed the excess contribution, it is only common sense to deduct the excess contribution from arrears and pay the balance, but EPFO's mindset will not allow that, and we may have to approach courts again for that. In short, there could be delays, but EPFO will be forced to implement the court order; maybe EPFO may go bankrupt in the long run or may have to depend on Government funding. The government will be forced because the government only passed the law which the SC has rightly interpreted now. I request everyone on this board, pensioners, and those who are still employed to go for it. Pensioners, go to the local office and submit the specified form based on which EPFO will inform you about the excess contribution to be paid, and EPFO will pay you arrears starting from the commencement of your pension. Please remember that your spouse/nominee will get half the enhanced pension; just go for it. Next week I will post the specified form.
From India, Thane
Very recently, the Central PF Commissioner has issued a circular to all RPFCs, stating that they should be ready to calculate the pension of higher wages at the earliest. It has also been observed that officers should not delay files by claiming they are awaiting clarification from the Head Office. However, the challenge lies in the fact that the software used to calculate pensions is still pending modification. As a result, a significant amount of manual calculations are currently necessary to determine the pension amount. It is important to note that no officer is willing to take the risk of manual calculations.
Please find attached a directive addressed to the Regional PF Commissioners.
From India, Kannur
Please find attached a directive addressed to the Regional PF Commissioners.
From India, Kannur
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