The?Employees Provident Fund?Organisation (EPFO) has recently issued a new set of guidelines mentioning the?procedure for eligible employees to submit an application for a higher pension under the Employees Pension Scheme (EPS).?Even employees who had not earlier applied for a higher pension under EPS but were entitled to do so can now do so, as per the ET report.
The deadline to apply for a higher pension under EPS was earlier March 3rd, then it was changed to May 3rd, 2023. It has been further shifted to 26th June 2023.
As per the circular, in compliance with the Supreme Court's judgment, the?following employees and their employers may submit a joint option under para 11(3) and 11(4) to the concerned regional office:
-The employees and employers who had contributed under paragraph 26(6) of the EPF scheme on salaries exceeding the prevalent wage ceiling of Rs 5,000 or Rs 6,500; and
-Did not exercise the joint option under the proviso to Para 11(3) of the pre-amended scheme (since deleted) while being members of EPS in 1995; and
-Were members prior to 01.09.2014 and continued to be a member on or after 01.09.2014
Thus, any employee who was a member of the Employees' Provident Fund (EPF) as of August 31, 2014, and did not opt for a higher pension under the EPS, has the option to opt for the same on or before 26 June, 2023.
Also Read:?Govt May Increase Mandatory?EPF?Contribution Limit To Rs 21,000
The circular has provided guidelines on how eligible employees can apply for higher pensions..
As per the circular, the manner in which such employees have to apply to the concerned regional office is as follows:
(i) The request will be made in such form and manner, as may be specified by the Commissioner
(ii)The joint option will contain the disclaimer and declaration as may be specified therein
(iii) In case of share requiring adjustment from Provident Fund to Pension Fund and if any re-deposit to the fund , explicitly consent of the employee will be given in the joint option form
iv) In case of transfer of funds from exempted provident fund trust to pension fund of EPFO an undertaking of the trustee shall be submitted. The undertaking shall be to the effect that due contribution along with interest up to the date of payment, will be deposited within the specified period
v) In case of employees of unexempted establishments, refund of requisite employer's share of contribution, the same shall be deposited with interest at the rate declared under para 60 of EPF scheme 1952 till the date of actual refund
vi) The method of deposit and that of computation of pension will follow through subsequent circular
vii) Aforesaid joint option must contain the proof of remittance of employer's share in provident fund on higher wages exceeding the prevalent wage ceiling of Rs 5000/6500 and a proof of joint option under 26 (6) of the EPF scheme duly verified by the employer
-For EPFO, this will mean a stream of sharply higher pension payouts, when linked to actual basic salary rather than the Rs 15,000 ceiling, as per Indian Express report. Experts are of the view that the pension scheme does not entail defined benefits but involves defined contribution, which could create strain on the finances of the retirement fund body in future.
For instance, an employee may have worked, and contributed for pension for 10 years, but after superannuation at age 58, will get a pension until death, which could be a period far exceeding the contributory period of 10 years. The payouts could extend beyond the death of the member, with a provision for pension to the dependent family members as well.
-?For members and employers, this would essentially imply higher annuity after retirement. The choice for a higher pension would then involve transferring of funds from the provident fund to the pension fund going back until September 2014. Details of this process are awaited.
In times of higher?inflation, and?with actual salaries having risen way beyond the pensionable salary cap of Rs 15,000, this would provide better social security cover for workers after retirement, as per the report.?
Only a negligible percentage of EPFO members ¡ª with salaries higher than the Rs 15,000 a month pensionable salary cap ¡ª had earlier opted for contributions based on actual salaries;?more employees are now expected to opt for the higher pension scheme.
Once the application form is submitted, the application will be dealt as specified under the circular, as per ET report.
The above application forms when received in the time period specified in the Joint Option Form will be dealt with in the following manner by the Regional P.F. Commissioner.
a) A facility will be provided for which URL will be informed shortly. Once received, the regional PF Commissioner will put up adequate notice on the notice board and banners for wider public information.
b) Each application will be registered and digitally logged. The receipt number will be provided to the applicant.
c) The application will land into the employer's login whose verification with digital signature/e-sign will be essential for further processing.
Also Read:?EPFO Begins Probe Into Rs 1,000-Crore Fraud
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