EPFO can't deny claims for pension on basis of delayed contribution: HC

Ruling in Kerala will help 'thousands of pensioners' facing similar issue, says expert

The Kerala High Court has ruled the Employees' Provident Fund Organisation (EPFO) has to make payments to people who contributed on their full salary during service, even if the payments for higher pension were made in bulk or delayed.

 

Justice Murali Purushothaman, while hearing writ petitions filed by four retired employees of Thiruvananthapuram Regional Co-operative Milk Producers Union, ruled that the EPFO's reason for rejecting their joint appeal was invalid.

 

The four contributed to the pension fund based on their full salary for most of their career and their employer made an equal contribution. However, EPFO denied them higher pension saying that during some months between 2004 and 2008, the payments were not made monthly but instead in bulk.

 

The High Court, while rejecting this argument, said: “Admittedly, the Employees Provident Fund Organisation has received contributions from both employees and employer under Para 26 (6)...for the period 2004–2005 to 2007–2008.”

 

The court observed that even though the payments were made in bulk, the employer had later submitted the month-wise breakup of those contributions. “The petitioners and the fourth respondent [employer] having complied with the requirements under the said paragraph, and the Employees Provident Fund Organisation accepted the contributions, the second respondent [EPFO] cannot deny the petitioners the benefit of higher pension,” the order stated.

 

“The petitioners are entitled to get higher pension on actual wages,” said the court. It asked the EPFO to process and disburse the revised pension within three months.

 

Why this matters

 

This verdict is a win for pensioners as it clarifies that the EPFO cannot reject higher claims because of technical issues like delayed or lump-sum contributions, especially when full salary-based payments were eventually made and accepted.

 

“The judgment passed by the Kerala High Court is a landmark ruling as it directly addresses a common ground on which EPFO has previously denied higher pension claims of the employees – namely that the pension contributions were either delayed or made in lump sum,” said Tarun Garg, director, Deloitte India.

 

“The judgment would certainly prove to be a win-win for employees as it sets a strong precedent that could help thousands of pensioners facing a similar issue and influence other High Courts to adopt a more employee-centric approach and interpretation in such cases,” he said.

 

What is Paragraph 26(6)?

 

This part of the EPF Scheme allows employees and employers to contribute on the actual salary (even if it's above the statutory ceiling). Many opted for this to secure a better pension in retirement.

 

According to Garg: “This recent Kerala High Court ruling does strengthen employees’ rights under Para 26(6) of the EPF Scheme, which allows employees to contribute based on their actual salary – beyond the statutory wage ceiling if both the employer and employee agree.”