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Wednesday, 29 November 2017

Will workers of exempted Cos get higher pension option? EPFO asks SC to decide

Sunil Dhawan
Digging in its heels over not giving exempt establishment employees the option to apply for higher pension, the Employees' Provident Fund Organisation (EPFO) has requested the Supreme Court to transfer all petitions, filed by such employees in different high courts, to itself. Once this happens, EPFO would have to fight its case only before the SC and not in multiple courts.
Twelve retired employees had petitioned the SC and won their case forcing EPFO to give them higher pension after they (the employees) paid up arrears of Employees' Pension Scheme (EPS) contribution based on previous full salary. However, EPFO had reportedly shown reluctance to give the same option to employees belonging to companies running their own PF trusts (subject to EPFO rules) which are termed as 'exempted' trusts by the EPFO. It appears from an internal EPFO circular issued today that several such employees have also filed petitions in various high courts seeking the higher pension option.
EPFO issued an internal circular today stating that they have filed a transfer petition in the apex court to transfer all the writ petitions filed in various high courts to the Supreme Court for deciding the subject matter.
The circular reads as : "It has been brought to the notice that Writ Petitions have been filed in different High Courts by the employees of exempted establishments challenging the circular dated 3 1-05-2017. In this connection it is informed that a Transfer Petition has been filed in the Hon' ble Supreme Court to transfer all the Writ Petitions filed in various High Courts to the Supreme Court for deciding the subject matter. Therefore, it is requested to place this fact before the Hon'ble High Court where such petitions have been filed and to defend the matter based on the directions already passed by Hon'ble Supreme Court as cited above."
Earlier, the EPFO had expressed reluctance to give pension on full salary to employees of exempt companies that manage their provident funds independently. Nearly 80 lakh of the estimated 5 crore members of the EPS work in exempt organisations.
It was expected that employees from exempt PF trusts would move the court and going by this circular it is clear that several employees have filed petitions in various high courts. "Post judgement, there is a possibility of many employees going back to EPFO and asking for the raise. On the other hand, EPFO says that this amendment would not be applicable to exempted PF trusts. Given the fact that the private PF trusts practically conducts duties of EPFO for their employees, there is no justification for these trusts to be treated differently," says Neeti Sharma, senior vice president, TeamLease Services.
There could be procedural delays in all this because if the contribution to the EPS account is increased with retrospective effect to give pension on full salary, a commensurate amount needs to be transferred from the individual's EPF account to EPS account. Not only this, the interest earned by the money for the period it remained with EPF should also go to EPS. There should not be any gridlock even if such transfers are to be made from an exempt organisation to the EPFO, provided guidelines are put in place.
Background
In March 1996, the EPS Act was amended to allow members to raise pension contribution to 8.33 percent of full salary (basic + dearness allowance) irrespective of what the salary is. However, for a decade, hardly anybody opted for higher contribution. In 2005, following media reports, including Times of India, several private EPF fund trustees and employees approached EPFO with the demand to remove ceiling on their EPS contribution and raise it to their total salary. EPFO rejected the demand claiming that the response should have come within six months of the 1996 amendment. In October 2016, the Supreme Court ruled in favour of employees' right to raise their contributions to the pension fund without imposing any cut-off date for eligibility.
ASource: The Economic Times
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