Deadline to join EPF pension extended, SC holds Rs 15,000 salary threshold invalid

NEW DELHI: In a relief to employees, the Supreme Court on Friday quashed the limit of Rs 15,000 monthly salary for joining pension fund scheme and also said the employees who have not exercised their option to join the Employee Pension Scheme must be given a further chance to do so. 

A bench of CJI UU Lalit, Justices Aniruddha Bose and Sudhanshu Dhulia upheld the provisions of the Employees Pension (Amendment) Scheme, 2014, as “legal and valid” but also read down certain provisions of the scheme concerning the employees.

The court said that exempted and unexempted establishments will have to be treated equally for the purpose of EPS. The court said that lack of clarity regarding cut-off date due to various HC rulings, resulted in failure of employees to exercise the option within the cut-off date of September 1, 2014.

Before the amendment, every employee who became a member of EPF scheme, 1952 (EPS) as of November 16, 1995, could avail EPS and the maximum pensionable salary cap was Rs 6500. The 2014 scheme had introduced changes in paragraph 11(3) of EPS, 1952 and inserted paragraph 11(4) of EPS scheme. Paragraph 11(3) had raised the cap from Rs 6500 to Rs 15000.

As per paragraph 11(4), only employees who were existing EPS members as of September 1, 2014, could continue towards the pension fund in accordance with their salaries. They were also given six months to opt for the new pension regime. An additional obligation was also created for the members whose salary exceeded Rs 15,000 to contribute at the rate of 1.6% of the salary.

Exercising its power under Article 142, the court removed the cut-off date of September 1, 2014. It also found that the additional requirement to contribute 1.16% of the salary was ultra vires (not as per law) but suspended the implementation of this part for six months.