Employees who were existing EPS members as on
September 1, 2014 can contribute up to 8.33 per cent of their 'actual' salaries -- as against 8.33 per cent of the pensionable salary capped at Rs 15,000 a month -- towards pension.The court struck down the requirement in the 2014 amendments mandating employee contribution of 1.16 per cent of the salary exceeding Rs 15,000 per month.
This will facilitate the subscribers to contribute higher to the scheme and get enhanced benefits accordingly.
Trade unions have demanded that the government call an extraordinary meeting of the central board of trustees of the retirement fund body EPFO for quick implementation of the apex court order.
The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 originally did not provide for any pension scheme. In 1995, through an amendment, a scheme was formulated for employees' pension, wherein the pension fund was to comprise a deposit of 8.33 per cent of the employers' contribution towards provident fund corpus. At that point of time, maximum pensionable salary was Rs 5,000 per month which was later raised to Rs 6,500.
The EPS amendment of August 22, 2014 had raised the pensionable salary cap to Rs 15,000 a month from Rs 6,500 a month, and allowed members along with their employers to contribute 8.33 per cent on their actual salaries (if it exceeded the cap) towards the EPS. It gave all EPS members, as on September 1, 2014, six months to opt for the amended scheme.
The amendment, however, required such members to contribute an additional 1.16 per cent of their salary exceeding Rs 15,000 a month towards the pension fund.
While not too many employees had opted to contribute based on their actual salaries, the Supreme Court order means that EPFO members and employers now have four months to opt for a pension scheme linked to actual salaries.
