THE EMPLOYEES’ PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952
“An Act to provide for the institution of provident funds, pension fund and deposit-linked insurance fund for employees in factories and other establishments” was enacted on 4th March 1952.
Basically it is one of the main platforms of savings in India for nearly all people working in Private sector Organizations. The Fund aims in providing financial security and stability to employees in an event when the employee is temporarily incapacitated or no longer fit to work or upon normal superannuation..
In exercise of the powers conferred by section 5 of the Employees’ Provident Funds Act, 1952 (19 of 1952), the Central Government framed the Employees’ Provident Funds Scheme, 1952.
The above Scheme was a great success and employees across all establishments, public or private accepted this social security measure adopted by the Government till the advent of the draconian ‘THE EMPLOYEES’ PENSION SCHEME, 1995’ which was introduced by GOI through a GSR notification dated 16th November 1995 . This Scheme was made applicable to the employees of all factories and other establishments to which the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 applies or is applied under various the relevant sub-sections of the main Act.
Para 3 of the Employees’ Pension Fund deals with the Funding of the Scheme:
A part of contribution representing 8.33 per cent of the Employee’s pay shall be remitted by the Employer to the Employees’ Pension fund and the Central Government shall also contribute at the rate of 1.16 per cent of the pay of the members of the Employees’ Pension Scheme and credit the contribution to the Employees’ Pension Fund subject to the maximum of RS.6500/- of the ‘Salary’
A couple of months after the Pension Scheme was framed w.e.f. 16.11.1995, a proviso was added to Clause 11(3) w.e.f. 16.3.1996 permitting an option to the employer and the employee for contribution on salary exceeding RS.5000 or Rs. 6000/-(w.e.f. 8/10/2001) per month. 8.33% of such contribution on full salary was required to be remitted to the Pension Fund.
As per Proviso to Para 11(3) of EPS 1995 joint option of employee and employer was required for remittance of contribution on wages high than the statutory wage limit for treating such higher salary for the purpose of pensionable Salary.
Initially there was mass resentment in accepting the Scheme as it was perceived that it was less beneficial to the Employees as only a pittance amounting to Rs.541/- (8.33 % of 6500) was only deducted towards Pension Scheme.
The thrusting of the Employees’ Pension Scheme, 1995, was challenged by the workers of RINL, Vizag ( W.P 17612 of 2005 in the Hon’ble High Court of Andhra Pradesh)
But most of the Organisations/employees were not aware of such notification and continued to contribute on wages higher than the statutory wage limit without excising the option.
Again vide Employees’ Pension (Amendment) Scheme, 2014 the EPFO fixed the maximum pensionable salary to Rs.15,000 per month . The Employees and the Employers were supposed to makea a joint request for such contribution on higher wages within a deadline fixed by the EPFO.
The Scheme was amended further by a subsequent notification, the Employee’s Pension (Fifth Amendment) Scheme, 2016 to provide that the pensionable salary for the existing members who prefer a fresh option, shall be based on the higher salary.
Infuriated by this action of the EPFO many
disgruntled retired pensioners filed a Writ Petition in the Hon’ble High Court
of Kerala in 2016. Their grievance was with the changes brought about by the
Employees’ Pension (Amendment) Scheme, 2014, which drastically reduces the.
The petitioners got a favourable judgement which was challenged by the EPFO in
the Hon’ble Supreme Court.
In a major relief to many employees, the Supreme Court has dismissed the Special Leave Petition filed against a Kerala High Court Judgment setting aside Employee’s Pension (Amendment) Scheme, 2014 that capped maximum pensionable salary to Rs.15, 000 per month.
The Apex Court observed “Since the pension scheme is intended to provide succour to the retired employees, the said object would be defeated by capping the salary.”
The attempt to maintain the stability of the fund by reducing the pension would only be counter-productive and would defeat the very purpose of the enactment,”
The above Order has come as a great boon to the Senior Citizens who were forced by the EPFO to accept the a pittance called as ‘pension’ and the verdict shall open many a Pandora’s box as on a rough estimate the Pension will shoot up to nearly 1200%.
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