EPS 95 Higher Pension Case

This is a post compiled by G. Srinivasa Rao, A Senior EPS 95 Pension Analyst. Even though one must congratulate the retired employees of BHEL, Tiruchi and their advocates for winning the case, some more points should have been inserted in the affidavits filed by them before the Hon’ble Madras High Court which makes their case even more stronger and prevent EPFO to go for appeal either before the Division Bench of the Hon’ble High Court of Madras or even Hon’ble Supreme Court. 1 EPFO stopped accepting options for Higher Pension w.e.f. 01-04-2004 without making an amendment to the EPS,’95. In the draft Annual Report of 2016-2017 it stated as follows: 11. Subsequently considering the financial viability of the Pension Scheme, 1995 based on various actuarial reports till then, the opportunity giving option to contribute on higher wages on becoming the member of the Employees’ Pension Scheme was stopped in the year 2004 vide Circular No. Pen in 4(38)/96/WB/59867, Dt: 01-12-2004. A clarification Circular discontinuing acceptance of contributions on higher wages in Pension Fund was also issued vide communication dated 22-11-2006 (nearly two years later) (Page No. 390) 12 Although administrative instructions were issued disallowing contributions on higher wages (wages exceeding ceiling amount), this provision for contribution on higher wages in the scheme was not “amended” till the year 2014. So, “legally”, the provision for contribution on higher wages continued from 16-11-1995 to 31-08-2014. Comment: Employees who superannuated from 16-11-1995 to 30-11-2004, on their own volition not exercised option for Higher Pension. Employees who superannuated from 01-12-2004 to 31-08-2014 were prevented by EPFO from exercising the option. Employees among the second category who are on rolls as on 01-09-2014 who were prevented previously while in service are now exercising options as per the judgement of 4th November, 2022. 2 Exempted Trust rules with regard to EPS,’95 should always be for remittance to EPS,’95 within the Ceiling only and the remaining amount from the Employer’s contribution to be kept along with Employee’s contribution in the Exempted Trust. Why this rule? Because the option for Higher Pension under EPS,’95 is by “choice” only. I am repeatedly saying it is by “choice” only. Suppose there are 3,000 employees in BHEL, Tiruchi. All may not opt for a higher pension. Only 1,000 may be willing. Hence, Trust rules should always be for remittance upto Ceiling to EPS,’95. This was even clarified by EPFO through News Paper advertisement on “6th January, 1996” (more than 29 years ago) Question No. 12: Though the Provident Fund Act applies subject to a wage ceiling of 5,000/- (as on 6th January, 1996), there are establishments where Provident Fund contributions (employer’s share as well as worker’s share) are being made even beyond the wage ceiling of 5,000/-. for the purpose of the new Pension Scheme will be employer’s share of contribution made beyond the wage ceiling of 5,000/- will be credited to the pension fund? Answer by EPFO: “No”, all contributions to the Pension fund (worker’s share as well as employer’s share) beyond the wage ceiling of 5,000/- will remain in the Provident Fund only. However, if the worker “voluntarily” wants the employer’s share of Provident Fund contributions on wages beyond the the limit of 5,000/- to be credited to the Pension fund the same will be credited to the Pension Fund. The workers concerned will also be eligible for higher pension in these circumstances. 3 Sri R.C. Gupta & Others judgement of 4th October, 2016 even permitted “retired” employees to pay the difference. This point was not mentioned in the present affidavit filed by the retired employees of BHEL, Tiruichi. ” At best what the Provident Fund Commissioner could do and which we permit him to do under the present order is to seek a return of all such amounts that the concerned employee may have taken or withdrawn from their Provident Fund account before granting them the benefit of the proviso to Clause 11(3) of the Pension Scheme. Once such a return is made in whichever cases such return is due, consequential benefits in terms of this order will be granted to the said employees. (Page No: 8) Most important point missing in the affidavit filed by retired employees of BHEL, Tiruchi: In the first affidavit submitted by EPFO in the Hon’ble Supreme Court in connection with the judgement of 4th November, 2022, on Page No. 410, EPFO quoted 92,55,580 employees as on 31-03-2017 from Exempted Establishments eligible for Higher Pension and made valuation @ 8,73,263.75 cr as liability. From where EPFO arrived at this figure of 92,55,580? It must be assumed that after thoroughly examining the exempted Trust rules, EPFO arrived at this figure because it is submitting to the Hon’ble Supreme Court, the highest court of the country. Retired employees of BHEL, Tiruchi should have asked EPFO for break-up establishment wise through RTI. But this was not done.