EPFO Higher Pension Scheme: When it comes to personal financial planning, there are limited options available for retirement. However, the Employee Provident Fund Organisation (EPFO) offers a solution for retirement planning with the EPS scheme. Recently, the organisation has decided to provide Higher Pension Scheme under EPS.
The last submission date was 03 May 2023 and has now been extended to 26 June 2023. Here is everything you need to know about the eligibility, benefits, and how you can apply for it.
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— EPFO (@socialepfo) May 17, 2023
What is EPS?
EPS stands for Employees’ Pension Scheme and it is a retirement savings scheme that was introduced by the Indian Government for employees working in the organized sector.
Under this scheme, both employees and employers make contributions to the employee’s retirement savings.
According to EPFO “An employee shall cease to be the member of Pension Fund from the date of attaining 58 years of age or from the date of vesting admissible benefits under the Scheme.”
The EPS was introduced in 1951. The organization states “The Employees' Provident Fund came into existence with the promulgation of the Employees' Provident Funds Ordinance on the 15th November, 1951. It was replaced by the Employees' Provident Funds Act, 1952.”
What is Higher Pension Scheme?
EPFO has recently announced the changes to Higher Pension Scheme under EPS.
The web circular from EPFO states “(i) In respect of members who have exercised joint option for contributing under the provisions of paragraph 11 of the Employees’ Pension Scheme, 1995 and who are found eligible, the employer's contribution shall be nine and forty-ninth per cent. (9.49%) of the basic wages, dearness allowance and retaining allowance of each member by
increasing one and sixteenth per cent. (1.16%) from the extant eight and one-third per cent. (8.33%);
“And (ii) the increased contribution shall be applicable to basic wages, dearness allowance and retaining allowance to the extent such basic wages, dearness allowance and retaining allowance exceed fifteen thousand rupees per month.”
According to this circular, the EPFO will take the additional 1.16% contribution from the employer's share of the EPF contribution. This means that employees will still get a higher pension.
However, the allocation of funds to the Employees' Provident Fund (EPF) and the Employee Pension Scheme (EPS) will be changed. This will result in a reduction in the EPF corpus and an increase in the EPS balance.
Who is Eligible for Higher Pension Scheme?
As per the Supreme Court’s order, an employee is eligible for a higher pension scheme if:
- The employee retired on September 1, 2014, and was making higher contributions to their EPF account. However, their request for higher contributions was rejected by the EPFO.
- The employee was a member of the EPS or EPF on September 1, 2014, and continued to be a member of the scheme after their retirement.
Here is the circular that states: “44 (iii) The employees who had exercised option under the provision to paragraph 11(3) of the 1995 scheme and continued to be in service as on 1st September 2014, will be guided by the amended provisions of paragraph 11(4) of the pension scheme”.
“44(iv) The members of the scheme, who did not exercise option, as contemplated in the provision to paragraph 11(3) of the pension scheme (as it was before the 2014 Amendment) would be entitled to exercise option under paragraph 11(4) of the post amendment scheme.
“Their right to exercise option before 1st September 2014 stands crystallised in the judgment of this Court in the case of R.C. Gupta (supra).
“The scheme as it stood before 1st September 2014 did not provide for any cut-off date and thus those members shall be entitled to exercise option in terms of paragraph 11(4) of the scheme, as it stands at present.
“Their exercise of option shall be in the nature of Joint options covering pre-amended paragraph 11(3) as also the amended paragraph 11(4) of the pension scheme.
“There was uncertainty as regards validity of the post amendment scheme, which was quashed by the aforesaid judgments of the three High Courts.
“Thus, all the employees who did not exercise option but were entitled to do so but could not due to the interpretation on cut-off date by the authorities, ought to be given a further chance to exercise their option.
“Time to exercise option under paragraph 11(4) of the scheme, under these circumstances, shall stand extended by a further period of four months. We are giving this direction in exercise of our jurisdiction under Article 142 of the Constitution of India. Rest of the requirements as per the amended provision shall be complied with”.
Further, EPFO has mentioned that “The Field Office will examine each case nad classify it into the following categories:
- Dues calculated have already been fully remitted to the EPS in the due months
- Dues calculated have not been remitted to the EPS but contribution on higher wages have been fully remitted to EPF and there is adequate balance in PF account.
- Dues calculated have not been remitted to the EPS but contribution on higher wages have been fully remitted to EPF and there is inadequate balance in PF account or the PF account is with trust of PF exempted establishments.”
How to Apply for Higher Pension Scheme?
The eligible employees can apply for higher pension claims through the online portal by following the steps listed below or by visiting the regional EPF offices.
- The EPFO has offered an option to apply for the scheme online through its EPFO Portal
- After visiting the site users have to click on the “Pension on Higher Salary” option.
- The user then has to fill out the details and submit the form
- Post submission, the website will register the information and provide a receipt to the applicant.
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