Concerns raised on EPFO's plan to evaluate high pension payout cases

Digital Desk: The Employees' Provident Fund Organisation (EFPO) latest circular on revisiting cases of higher pension for individuals who retired before September 2014 has sparked fear among some retirees that they may lose the advantage that they have been enjoying for the previous five years or so. 

The circular, which was sent to EPFO regional offices on Wednesday, stated why the topic of greater pensions had to be reviewed. Employees who retired before September 1, 2014, and were granted a pension on higher salaries "need to be re-examined," it stated.

The payment of greater pensions should be halted for this reason. In other words, it had to be ensured that such seniors "are not given greater pensions beginning in January 2023," according to the circular, adding that their pension will now be altered based on the wage ceiling of 5,000 or 6,500. 

The EPFO referenced certain passages of the Supreme Court's November 2022 decision in support of its motion.

The issue of the maximum pensionable salary was addressed in paragraph 11(3). It also mentioned an agreement between employees and employers to allow the Pension Fund to remit a proportionate share of the employers' contribution on wages beyond the statutory ceiling. The second aspect of the paragraph was eliminated as part of a Pension Scheme change that took effect on September 1, 2014.

Parveen Kohli, a pensioners' rights activist, expressed concern that the current decision will harm thousands of retirees, accusing the EPFO of "high-handedness" in releasing such a circular. 

"The circular distorts the facts and conceals the details. In the OTIS Elevator case in 2003, the Supreme Court affirmed the EPS-95. Later, the pensions of 24,672 people were revised. Other pensioners received favourable orders from various courts later on. According to the most recent circular, all of these people have a chance of being compensated by the EPFO," Mr. Kohli stated.

According to the EPFO circular, before modifying any pension entitlement, advance notification should be sent to the pensioner so that he or she has an opportunity to verify that he or she used the option under paragraph 11(3) of the EPS before retiring before September 1, 2014.

"Furthermore, any recovery that may occur as a result of such revision should be done in a phased and compelling manner. "The RPFC [Regional Provident Fund Commissioner]-I/officer in charge of the region will be the appropriate authority to re-determine pension entitlement and commence recovery if any," according to the circular. 

It went on to say that the Supreme Court's instruction in the R.C. Gupta case applied to employees who had contributed to higher wages under paragraph 26(6) of the EPF Scheme, 1952 [joint consent to be provided by employer-employee for permitting contribution on the employee's higher pay] and had also exercised their option under 11(3) of the EPS-1995 before retirement.

"Meanwhile, to stop over payment, if any, in respect of employees who had retired before September 1, 2014, without exercising any option under Para 11(3) or the pre-amended scheme, and have been granted a pension on higher wages, their cases need to be re-examined to ensure that they are not given higher pension from January 2023 onwards. Pension in such circumstances may be immediately returned to pension on salaries up to a cap of 5,000 or 6,500," the circular stated, requesting that regional offices exercise "utmost care" to identify such cases where a greater pension was issued due to a court judgement.