This Alert summarizes the Supreme Court of India ruling[1] on availing higher pension benefit by domestic employees contributing to the Employees’ Provident Funds Scheme, 1952 (Provident Fund Scheme) and Employees’ Pension Scheme, 1995 (Pension Scheme) in India and the circular issued by the Employees’ Provident Fund Organisation (EPFO) dated 20 February 2023.
On 4 November 2022, the Supreme Court held that the amendment made to the Pension Scheme effective on 1 September 2014 was valid, subject to certain directions.
Subsequently, the EPFO vide circular dated 20 February 2023 acknowledged that the employees who satisfy the following conditions may, along with their employers, submit joint option application with the EPFO under the Pension Scheme to avail higher pension:
- Employees and employers who had contributed to Provident Fund Scheme on salary exceeding the prevalent statutory ceiling
- Who did not exercise the option for higher pension earlier
- Who were members of the Pension Scheme prior to 1 September 2014 and continued to be members on or after 1 September 2014
As per the Supreme Court ruling, the applications need to be filed within 4 months from the date of the ruling (i.e., on or before 3 March 2023). EPFO is likely to issue further guidelines on the following aspects:
- The form and manner of request to be made by the employee
- Manner of deposit / reallocation of past corpus from the Provident Fund Scheme to Pension Scheme along with interest till the date of refund
- Computation of pension for such employees
[1] Special Leave Petition (C) Nos. 8658-8659 of 2019
