EPFO’s plan to review high pension payout cases sparks concern

It says that the cases of employees who retired prior to September 1, 2014 without exercising any option under paragraph 11(3) of the pre-amended Employees’ Pension Scheme, 1995 and were granted pension on higher wages need to be re-examined

January 26, 2023 09:54 pm | Updated January 27, 2023 08:15 am IST - New Delhi

Alleging “high-handedness” of the EPFO in issuing such a circular, Parveen Kohli, a pensioner rights activist, said he feared that the latest move would affect thousands of pensioners.? File

Alleging “high-handedness” of the EPFO in issuing such a circular, Parveen Kohli, a pensioner rights activist, said he feared that the latest move would affect thousands of pensioners.? File | Photo Credit: Reuters

The latest circular by the Employees’ Provident Fund Organisation (EFPO) on reopening cases of higher pension for those who retired prior to September 2014 has evoked concern among sections of such pensioners that they may lose the benefit which they have been enjoying for the past five years or so.

The circular, issued on Wednesday and addressed to the regional offices of the EPFO, explained why the issue of higher pension had to be reopened. The cases of employees who retired prior to September 1, 2014 without exercising any option under paragraph 11(3) of the pre-amended Employees’ Pension Scheme, 1995 (EPS-95) and were granted pension on higher wages “need to be re-examined”, it said.

It was for this purpose that the payment of higher pension should be stopped. In other words, it had to be ensured that such pensioners “are not given higher pension from the month of January 2023”, the circular said, adding that their pension would now be revised based on the salary ceiling of ?5,000 or ?6,500.

In support of its move, the EPFO cited certain paragraphs of the Supreme Court’s judgment of November 2022.

Paragraph 11(3) dealt with the matter of maximum pensionable salary. It also talked of an arrangement for employees and employers to give a joint option for allowing to the Pension Fund the remittance of a proportionate portion of the employers’ contribution on wages higher than the statutory ceiling The second feature of the paragraph was removed through an amendment to the Pension Scheme, effective September 1, 2014.

‘EPFO high-handedness’

Alleging “high-handedness” of the EPFO in issuing such a circular, Parveen Kohli, activist for pensioners’ rights, said he feared that the latest move would affect thousands of pensioners. “The circular is distorting the facts and suppressing the details. The Supreme Court upheld the EPS-95 in 2003 in OTIS Elevator case. The pension of 24,672 persons was revised later. There are other pensioners who got favourable orders from various courts subsequently. All these persons are facing the prospects of recovery by the EPFO, if one is to go by the latest circular,” Mr. Kohli said.

The EPFO’s circular said that before revising any pension entitlement, an advance notice should be issued to the pensioner so that he or she had an opportunity to prove that he or she had availed himself or herself of the option under paragraph 11(3) of the EPS before his or her retirement prior to September 1, 2014.

“Further, any recovery which may arise after such revision should be done in a staggered and persuasive manner. The RPFC [Regional Provident Fund Commissioner]-I/ officer in charge of the region will be the competent authority to re-determine the pension entitlement and initiate recovery, if any,” the circular said.

It added that the Supreme Court’s direction in the R.C. Gupta case pertained to such employees who had contributed on higher wages under paragraph 26(6) of the EPF Scheme, 1952 [joint consent to be provided by employer-employee for permitting contribution on the employee’s higher pay] and had further exercised their option under 11(3) of the EPS-1995 prior to their retirement.

“Meanwhile, in order to stop over payment, if any, in respect of employees who had retired prior to September 1, 2014 without exercising any option under Para 11(3) or the pre-amended scheme, and have been granted pension on higher wages, their cases need to be re-examined to ensure that they are not given higher pension from the month of January 2023 onwards. Pension in such cases may be immediately restored to pension on wages up to the ceiling of ?5,000 or ?6,500,” the circular said, asking the regional offices to take “utmost care” to identify such cases where higher pension was granted on account of the judgment of any court.

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