A new pension product for organized sector workers who are getting basic wages of more than Rs 15,000 per month is being contemplated by the retirement fund body EPFO for those who are not mandatorily covered under its Employees’ Pension Scheme 1995 (EPS-95).
Currently, all the employees who are working in the organized sector and are getting basic wage (basic pay plus dearness allowance) up to Rs 15,000 per month are mandatorily covered under EPS-95.
A source who is privy to this development said that it is due to the higher demand for higher pension on higher contributions among the members of the Employees’ Provident Fund Organisation (EPFO), that an active consideration to bring out a new pension product or scheme for those whose monthly basic wages are more than Rs 15,000 is in development.
New Pension Product Discussion
On March 11 and 12 at Guwahati, in the meeting of EPFO’s apex decision making body Central Board of Trustees (CBT), the proposal on this new pension product could come up for discussion. Report is most likely to be submitted by a sub-committee constituted by the CBT on pension related issues in November 2021.
The source explained that there are EPFO subscribers who are getting more than Rs 15,000 monthly basic wages who are forced to contribute lower (at the rate of 8.33 per cent of Rs 15,000 per month into EPS-95) and thus they get lower pension.
In order to cap monthly pensionable basic wages to Rs 15,000, the scheme had been amended by EPFO in 2014.
In the view of price rise and pay revisions in the formal sector, from September 1, 2014 it was revised up from Rs 6,500. The threshold of Rs 15,000 applies only at the time of joining service.
The proposal of having the threshold monthly basic wage to Rs 25,000 was not approved. Raising the pensionable pay could have brought 50 lakh more formal sector workers under the ambit of EPS-95 as per industry estimates.
More Details
“The proposal to increase the salary cap from Rs 15,000 per month to Rs 25,000 per month to be paid under the Employees ‘Provident Funds & Miscellaneous Provisions Act, 1952 was lodged by the Employees’ Provident Fund Organization (EPFO). No decision has been taken. , “said former Labor Minister Bandaru Dattatreya in a written reply to Lok Sabha in December 2016.
The source said there was a need for a new pension product for those who were forced to contribute less or who could not sign up for the scheme as their monthly income was more than R15 000 at the time of joining.
The source added that there is no move to raise the pension snow by EPFO ??in the near future and in that case, the body should consider providing assistance to those legal sector employees who are not included in the EPS-95 due to the high level. basic wages.
The issue of pension balance is a matter for judges in the Supreme Court. In 2014, the Kerala High Court allowed workers to contribute to EPS-95 on the basis of their basic salaries.
In April 2019, the Supreme Court rejected an application for special leave filed by the EPFO ??against a decision by the Kerala High Court. In January 2021, the high court recalled an injunction filing a complaint filed by the EPFO.
In February, 2021, the Supreme Court barred the high courts of Kerala, Delhi and Rajasthan from initiating hearings of contempt of the Center and the EPFO ??for not applying their decisions.
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