New Delhi: Retirement fund body EPFO is mulling to introduce a new pension product for workers in the organized sector who are getting a basic salary of more than Rs 15,000 per month and are eligible for its Employees’ Pension Scheme 1995 (EPS-95). are not necessarily covered under
At present, all employees in the organized sector whose basic pay (basic pay plus dearness allowance) is up to Rs 15,000 per month at the time of joining service are mandatorily covered under EPS-95.
“There has been a demand for higher pension on higher contribution among the members of the Employees’ Provident Fund Organization (EPFO). Thus, it is being actively considered to bring a new pension product or scheme for those whose monthly basic salary is more than Rs 15,000,” a source close to the development told PTI.
According to the source, the proposal on this new pension product may come up for discussion in the meeting of the EPFO’s apex decision-making body Central Board of Trustees (CBT) in Guwahati on March 11 and 12.
During the meeting, a sub-committee set up by the CBT on pension-related issues in November 2021 will also submit its report.
The source said that there are EPFO subscribers who are getting more than Rs 15,000 monthly basic salary, who are forced to contribute less (at the rate of 8.33 percent of Rs 15,000 per month in EPS-95) and thus they Gets less pension.
The EPFO had amended the scheme in 2014 to limit the monthly pensionable basic pay to Rs 15,000.
The limit of Rs 15,000 is applicable only at the time of joining the service. This was revised upwards from Rs 6,500 with effect from 1 September 2014 in view of the price hike and wage revision in the formal sector.
Later, the demand for raising the monthly basic pay limit to Rs 25,000 was discussed and discussed, but the proposal was not approved.
According to industry estimates, the increase in pensionable wages could have brought 50 lakh more formal sector employees under the EPS-95.
“The proposal to increase the wage ceiling from Rs 15,000 per month to Rs 25,000 per month for coverage under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 has been submitted by the Employees’ Provident Fund Organization (EPFO). No decision has been taken in this regard. Former Labor Minister Bandaru Dattatreya had said in a written reply in the Lok Sabha in December 2016.
The source said there is a need for a new pension product for those who are either forced to contribute less or who could not subscribe to the scheme as their monthly basic wages at the time of joining service were more than Rs 15,000 .
The source said that no step has been taken by the EPFO to increase the pensionable salary limit in the immediate future and in that scenario, the body will have to think of giving coverage to those formal sector employees who are eligible for EPS due to higher salaries. -95 out. basic salary.
The issue of pensionable salary limit is also sub-judice in the Supreme Court. In 2014, the Kerala High Court allowed employees to contribute to EPS-95 based on the actual basic pay drawn by them.
In April 2019, the apex court had dismissed a special leave petition filed by the EPFO against the Kerala High Court’s decision. In January 2021, the top court withdrew the dismissal order in the review petitions filed by the EPFO. Also read: Multibagger Stock: 6500% Returns to Investors in Few Years; Chance to earn more?
In February 2021, the apex court restrained the High Courts of Kerala, Delhi, and Rajasthan from initiating contempt proceedings against the Center and the EPFO for non-implementation of their decisions.