Amended EPS upheld by SC: What changes?

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Last Updated07/11/2022

In a significant ruling, the SC upheld the Employees’ Pension (Amendment) Scheme, 2014.
Allows another opportunity to members of the Employees’ Provident Fund Organisation (EPFO) to opt for higher annuity over the next four months.

Employees who were existing EPS members as on September 1, 2014 can contribute up to 8.33% of their ‘actual’ salaries.
Against 8.33% of the pensionable salary capped at Rs 15,000 a month — towards pension.
The court read down certain provisions concerning the current subscribers to the scheme.
Amendment required members to contribute an additional 1.16% of their salary exceeding Rs 15,000 a month.
Ultra vires of the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.

For employees’ pension - the pension fund was to comprise a deposit of 8.33% of the employers’ contribution to be made towards provident fund corpus.
Maximum pensionable salary - Rs 5,000 per month.
Administered by the EPFO
Aims to provide employees with pension after the age of 58.
Employee and the employer contribute 12% of the employee’s basic salary and dearness allowance to the EPF.
Employee’s entire part goes to EPF
12% contribution made by the employer is split as 3.67% contribution to EPF and 8.33% contribution to EPS.
Government of India contributes 1.16% as well for an employee’s pension.
Employees do not contribute to the pension scheme.

Raised the pensionable salary cap to Rs 15,000 a month from Rs 6,500 a month.
Allowed members along with their employers to contribute 8.33% on their actual salaries towards the EPS.
Gave all EPS members, as on September 1, 2014, 6 months to opt for the amended scheme.
Extendable by another 6 months at the discretion of the Regional Provident Fund Commissioner.
Required such members (with actual salaries over Rs 15,000 a month) to contribute an additional 1.16% of their salary exceeding Rs 15,000 a month towards the pension fund.