In a landmark judgment, the Supreme Court has dismissed the Employees Provident Fund Organisation (EPFO) petition challenging the Kerala High court’s earlier verdict, directing to ensure pensions scheme applicable to all Private Sector employees.
While dismissing the special leave petition filed by the EPFO observed; “There is no merit in your argument as far as pensioner’s contribution issue over retiring employees is concerned. Hence, it is dismissed.”
The Kerala High Court in its directive had asked the EPFO to pay full pension on the basis of total salary drawn, instead of capping the amount on which the contribution of pensioner is calculated at a maximum of Rs 15,000 per month.
The government Employees Pension Scheme was introduced way back in 1995 for the organized sector employees. Those who are covered under the scheme will get pension on permanent basis after their superannuation. Every employees with a monthly salary combined with DA of Rs 15,000 or lesser, mandated to enroll into this scheme.
The empoyer under this scheme was initially supposed to contribute 8.33 per cent of their empoyee’s salary. This contribution, however, was then capped at 8.33 per cent of Rs 6,500. Later the government amended the act and allowed any percentage of the actua salary to ease both employees and employer has no objection.
But, interestingly, the EPFO has amended the act against in 2014 and increased the contribution to 8.33 per cent of a maximum amount of Rs 15,000. In the same amendment, it made it clear that the total salary of an employee will be calculated as average of last vie years’ monthly income and not just one year’s salary. In other words, it lowered the pension of many employees.
As a result, the Kerala High Court set aside the 2014 amendment of EPFO and reinstated the old pension calculation procedure.
Following the High Court verdict, the EPFO moved a Special Leave Petition (SLP) in the apex court challenging the lower court, which was dismissed as it holds no merit to consider.
In fact, several High Courts like the Karnataka, Madras, AP and Rajasthan, too have asked the EPFO to compy with the orders of the apex court as far as pension scheme is concerned.