Higher pension scheme

The last date to apply for a pension on a higher salary is May 3, 2023. With less than a week to apply for a higher pension, there is still a lot of confusion and ambiguity on how to apply and how much portion of funds need to be reallocated from the EPF to the EPS in order to receive a higher pension and what employers can do if there is insufficient data available with them in terms of old wage records and other documents to cross-check the information provided by employees. Amid the confusion and chaos here is step by step procedure on how to apply for a higher pension from EPFO. First, who is eligible? To whom it applies? The higher EPS scheme does not apply to all employees. It only applies to employees who were part of EPF on or before 2014. In the judgment of the Supreme Court in the case of EPFO vs. Sunil Kumar decided on 04.11.2022 only those employees who have contributed to the provident fund on actual salary i.e., over and above the statutory limit of salary (Rs 15,000) for coverage under the EPF, to the Provident Fund are eligible to claim for higher pension. How to apply? The employees who are entitled to claim higher pensions are required to make an application online in the portal of the EPFO.  The format of the application is available online.  The portal also contains guidelines for filling up the different columns one after another. The page is auto filled in accordance with data available with EPFO. However, if you have worked with multiple employer...

What was the Supreme Court ruling on the Employee Pension Scheme (EPS) all about? As an employee, you’d know that 12 per cent of your basic pay (plus permanent components such as DA) is deducted every month towards a contribution to the Employees Provident Fund or EPF. This is matched by your employer, an annual interest is declared, and a lumpsum is paid to you at retirement. While your 12 per cent contribution goes entirely into your EPF account, 8.33 per cent of the employer’s contribution, in some cases, goes into the Employee’s Pension Scheme or EPS, a separate scheme for guaranteed pension payouts after retirement. On September 1, 2014, the government brought in some amendments. It said that the EPS contribution of 8.33 per cent would be calculated on a maximum salary of ₹15,000. Until then, the salary cap was ₹6,500, but employers could make higher contributions based on actual pay. It also said that employees earning over ₹15,000/month and joining after September 1, 2014, could no longer avail of EPS. Employees unions, finding these changes unpalatable, filed cases against the EPFO in High Courts and won. The EPFO appealed in the Supreme Court (SC), which passed its final ruling in November 2022. What did the SC say? The SC ruling said the Centre had a right to restrict EPS benefits only to employees earning up to ₹15,000/month, from September 1, 2014. But it also held older employees who had been members of the EPF before September 1, 2014, and were still working,...

Synopsis Employees who are eligible to apply for higher pension under the Employees' Pension Scheme (EPS) are confused about how they can submit joint application form on the Member Sewa portal if they do not have necessary documents. The Kerala High Court judgement dated April 12, 2023 has asked EPFO not to insist on the proofs. Here's how an employee can submit the form to apply for higher pension. The However, the Kerala High Court in its judgment dated April 12, 2023, asked the EPFO not to ask for the proof and make it difficult for the eligible employees to apply for the higher pension. The court asked the EPFO to ensure feasible alternative arrangements — including permission to submit hard copies of the option — are made if appropriate modifications cannot be made in the online facility. The court further said that necessary arrangements must be made within 10 days. Till now, there is no clarity from the EPFO on this. The 10-day deadline is going to get over on April 22 Noorul Hassan, Partner, Lakshmikumaran & Sridharan Attorneys: The EPFO has enabled an online facility to submit joint options for Prior to this order, employees could not apply through the online facility if they did not have proof for the joint option exercised under the PF Scheme. Employees now have the liberty to file the joint option without submitting proof for it. The decision also clarified that the earlier joint option under the PF Scheme is not necessary for employees of exempted establishme...

The deadline for opting for higher pension under the Employee Pension Scheme (EPS) is 26 June. The fact that the Employees‘ Provident Fund Organisation (EPFO) is making it difficult for people to opt for higher pensions is a giveaway that this is probably a good option. The math confirms this–the higher pension under EPS does look very attractive. However, you should base your decision not on the math, but factors which are personal to you. EPFO was set up in 1952 to manage the employees’ provident fund (EPF) scheme. Both the employer and the employee contribute 12% each of the employee’s basic pay into the EPF. The EPF did not initially have any provision for pension. In 1995, EPFO started EPS to provide members with a life-long pension. Out of the 12% employer contribution, it was mandated that 8.33% will go into EPS and the balance 3.67% into EPF. When the EPS was introduced in November 1995, it fixed the maximum pensionable salary at ₹5,000 per month. The 8.33% of employer’s contribution towards your EPS is calculated on this pensionable salary. Even if your actual salary was higher, your EPS contribution was computed based on the lower statutory limit. In March 1996, EPFO included an option to contribute to EPS based on actual salary. Thus, if your salary was say ₹10,000, you had an option of asking your employer to contribute 8.33% to your EPS on this higher salary. In this option, your actual last drawn salary would be considered for deciding your pension and not th...

EPFO Higher pension deadline: Despite the looming deadline of June 26, 2023, to apply for a higher pension with the Employees Provident Fund Organisation (EPFO), there is still a lack of clarity on the range of issues such as how payment and calculation will be done, how discrepancies between wage records maintained at EPFO level and that maintained at the level of employer will be resolved. Similarly, what would happen if one of the employers is no longer in existence or has merged. Given the confusion, experts say the deadline may be extended again, although chances are low as the deadline has already been extended twice by the EPFO. “The EPFO is expected to issue additional guidance on how the higher pension would be calculated. Further, once the EPFO scrutinises each application, there could be lack of clarity on how transfers from the EPF account to the EPS account will be undertaken and how discrepancies between wage records maintained at EPFO level and that maintained at the level of employer will be resolved. What would happen if one of the employers is no longer in existence or has merged? These are some of the open questions,” said Sowmya Kumar, Partner, INDUSLAW. Will the deadline be extended again? “For those who have retired how the payment and calculations will do done is still not clear, and therefore there are chances that the deadline can be extended again,” said Shantala Kumble, Senior Vice President, International Money Matters, a Sebi-registere...

Synopsis As per the circular, the formula for the calculation of higher pension will be different for those retiring before September 1, 2014, and those retiring after this date. The circular has come after the Supreme Court in its judgement dated November 4, 2022 allowed certain employees to apply for higher pension under the EPS. The Employees Provident Fund Organisation ( Those who retired before September 1, 2014If the pension (EPS) of an eligible applicant started prior to September 1, 2014, then the higher pension calculation will be based on the average monthly pay drawn during the contributory period of service during the 12 months preceding the date of retirement i.e date of exit from the membership of the pension fund Also Read: Why September 1, 2014 is importantIt is important to note that the government revised the pension calculation formula in September 2014. Till August 31, 2014, the average salary during the 12 months preceding the date of retirement, was taken into account. However, from September 1, 2014, the government revised it to 60 months. This change resulted in a lower pension for those retiring on or after this date. Here is an example to understand this. For instance, assuming you joined the EPS scheme in October 2008 and your retirement is in September 2033. Here, the service period is of 25 years (September 2033 - October 2008). The average salary for pension calculation will be calculated on the basis of your average pay in the last 5 years (6...

By India Today Information Desk: The Employees Provident Fund Organisation (EPFO) has announced a new set of guidelines for employees who want to increase their pension. There is a new window that was earlier not accessible to the individuals who wanted to receive a higher scale of pension. The EPFO's new instructions come only two weeks before the Supreme Court's four-month deadline for eligible subscribers to opt for higher pensions under EPS. EPF HIGHER PENSION: NEW GUIDELINES • A disclaimer should be included in the joint option/higher pension claim application. • On the joint option/application form, an employee must give his/her consent to a share adjustment from PF to EPS and a re-deposit of the amount. • An employee must provide a trustee's commitment for a share transfer of money from an exempted PF trust to the EPFO pension fund. The undertaking shall be valid for the timely deposit of due contribution and interest up to the payment date. • For workers of unexempted businesses, the employer's contribution share refund shall be deposited at the interest rate declared in Paragraph 60 of the EPF Plan, 1952. EPF HIGHER PENSION: DOCUMENTS REQUIRED The following papers should be supplied with the higher pension claim application: • Evidence of a joint option is verified by the employer and filed in accordance with Section 26(6) of the EPF programme. • Evidence of joint option certified by the employer is submitted in accordance with Paragraph 11(3). • Evidence of EPS c...

Metro Manila (CNN Philippines, June 6) — The state-run Social Security System (SSS) is crafting a new pension scheme that will allow its members to build a bigger nest egg come their retirement. Once approved by the SSS policy-making body of commissioners, the monthly retirement pension will breach the current ₱20,000 ceiling, its top official said on Tuesday. The plan will not need an executive order from Malacañang or any congressional approval. "The pension will be increased from the current say 5 [thousand pesos], 10 [thousand pesos], to as high as 30,000… 40,000," SSS President Rolando Macasaet told reporters. The SSS has set a timetable of two to three months to roll out the larger pension program, but the chief executive officer clarified that the higher pension scheme is voluntary. "Voluntary lang ito. Pero ang mga employers, kung gusto nilang mag-share, puwede din lalo na for their employees na gusto nilang i-retain," Macasaet explained. [Translation: This is voluntary. But if the employers want to share, they can share especially for the employees they want to retain.] The existing setup is that retirees get a pension within the ₱4,000 to ₱20,000 range per month, depending on how much they contributed to the fund. The logic is that the bigger amount of premium the member voluntarily contributes, the greater the benefit when he or she retires, unlike the current maximum monthly pension of just ₱20,000. The agency previously increased the contribution rate of its m...

Synopsis As per the circular, the formula for the calculation of higher pension will be different for those retiring before September 1, 2014, and those retiring after this date. The circular has come after the Supreme Court in its judgement dated November 4, 2022 allowed certain employees to apply for higher pension under the EPS. The Employees Provident Fund Organisation ( Those who retired before September 1, 2014If the pension (EPS) of an eligible applicant started prior to September 1, 2014, then the higher pension calculation will be based on the average monthly pay drawn during the contributory period of service during the 12 months preceding the date of retirement i.e date of exit from the membership of the pension fund Also Read: Why September 1, 2014 is importantIt is important to note that the government revised the pension calculation formula in September 2014. Till August 31, 2014, the average salary during the 12 months preceding the date of retirement, was taken into account. However, from September 1, 2014, the government revised it to 60 months. This change resulted in a lower pension for those retiring on or after this date. Here is an example to understand this. For instance, assuming you joined the EPS scheme in October 2008 and your retirement is in September 2033. Here, the service period is of 25 years (September 2033 - October 2008). The average salary for pension calculation will be calculated on the basis of your average pay in the last 5 years (6...

Metro Manila (CNN Philippines, June 6) — The state-run Social Security System (SSS) is crafting a new pension scheme that will allow its members to build a bigger nest egg come their retirement. Once approved by the SSS policy-making body of commissioners, the monthly retirement pension will breach the current ₱20,000 ceiling, its top official said on Tuesday. The plan will not need an executive order from Malacañang or any congressional approval. "The pension will be increased from the current say 5 [thousand pesos], 10 [thousand pesos], to as high as 30,000… 40,000," SSS President Rolando Macasaet told reporters. The SSS has set a timetable of two to three months to roll out the larger pension program, but the chief executive officer clarified that the higher pension scheme is voluntary. "Voluntary lang ito. Pero ang mga employers, kung gusto nilang mag-share, puwede din lalo na for their employees na gusto nilang i-retain," Macasaet explained. [Translation: This is voluntary. But if the employers want to share, they can share especially for the employees they want to retain.] The existing setup is that retirees get a pension within the ₱4,000 to ₱20,000 range per month, depending on how much they contributed to the fund. The logic is that the bigger amount of premium the member voluntarily contributes, the greater the benefit when he or she retires, unlike the current maximum monthly pension of just ₱20,000. The agency previously increased the contribution rate of its m...