Supreme Court hears the validity of pension scheme amendment

The pensioners had earlier informed the apex court that asking the employees to contribute 1.16% for salaries above Rs 15k was against Employees' Provident Funds And Miscellaneous Provisions Act, 1952

New Delhi

The Supreme Court on Monday heard the EPF pension case and said the difference between Employees Provident Fund Organisation (EPFO) and Employees Pension Scheme(EPS) has to be determined to assess the pension scheme amendment.

The pensioners had earlier informed the apex court that asking the employees to contribute 1.16% for salaries above Rs 15,000 as per the Employee's Pension (Amendment) Scheme, 2014 was against the Employees' Provident Funds And Miscellaneous Provisions Act, 1952.

The bench of Justices U U Lalit, Aniruddha Bose, and Sudhanshu Dhulia heard the appeals filed by the Employees Provident Fund Organisation challenging the Kerala, Rajasthan, and Delhi High Court judgments that had quashed the 2014 Amendment Scheme.

In 2018, the Kerala High Court had set aside the Employee's Pension (Amendment) Scheme, 2014. The amendment allowed paying pension in proportion to the salary above the threshold limit of Rs 15,000 per month.

The Court was informed that if an employee wants to contribute above the threshold limit of the base salary of Rs 15,000 then they can contribute 1.16% of the salary.

Earlier, under the EPS, the maximum pensionable salary cap was Rs 6,500. But members whose salaries exceeded this limit could opt, along with their employers, to contribute up to 8.33% of their actual salaries.

The amendments have raised the cap from Rs 6,500 to Rs 15,000. However, the catch is that employees who were already members of EPS as of September 1, 2014, could continue to contribute to the pension fund in accordance with their actual salaries. So, an employee who has become a member of EPS after September 1, 2014, would not get pension on a par with their actual salary.

The amendments also said members whose salary exceeded the Rs 15,000 cap had to contribute 1.16% of the salary besides their provident fund contribution.

The counsel for the pensioners said, "An employee putting in money for pension, is unheard of. For the first time, an imposition is placed on the employee to contribute 1.16%."

The court observed that for anything over Rs 15,000, the employee must contribute 1.16%. "Because you are going to contribute 1.16%. So, theoretically, 1.16 must come from your pocket. Therefore, you are accepting liability on your shoulders," it said.

Rebutting this, the counsel for pensioners said, “To the Pension Fund, I am not expected to contribute. The government must contribute but I cannot be asked to contribute. If you ask the employee to contribute then the Act has to be amended."

The pensioners on Wednesday also said the matter was of great importance and a lot of senior citizens were affected.

The court was also informed last week that the right to opt for the scheme could not be barred by the cut-off date according to the amendment.

The court is likely to hear the matter again on Thursday.