Employees’ Pension Scheme: SC Holds Revisions as Legal, Reads Down Certain Rules
MAS Team | 05 November 2022
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The Supreme Court on Friday declared as legal and valid the provisions contained under Employees’ Pension Amendment (Scheme), 2014, which capped the maximum pensionable salary (basic pay plus dearness allowance) at Rs15,000 per month.
The court, however, read down certain provisions of the scheme.
A bench of chief justice UU Lalit and justices Aniruddha Bose and Sudhanshu Dhulia was listening to the appeals of Employees’ Provident Fund Organisation (EPFO) and the Union government challenging the judgements of high courts of Kerala, Rajasthan and Delhi, quashing the 2014 amendments, when it made the remarks.
Section 11(3) and 11(4) of the Employee Pension Scheme were amended via a government notification on 22 August 2014. It came into force on 1st September that year.
While section 11(3) enhanced the maximum pensionable salary limit from Rs6,500 to Rs15,000, section 11(4) allowed employees to enhance their pensionable salary beyond Rs15,000.
Section 11(4), however, was made available to employees only if they exercised their choice by September 1, 2014 (extendable by another six months), and made an additional contribution that was calculated at 1.16% of their salary.
“We accordingly hold and direct: The provisions contained in the notification no....dated August 22, 2014 are legal and valid. So far as present members of the fund are concerned, we have read down certain provisions of the scheme as applicable in their cases…,” the top court said.
The bench noted that after the amendment, the maximum pensionable salary was to be kept at Rs15,000 per month, from the earlier ceiling of Rs6,500 per month.
The existing employees, as on September 1, 2014, who did not exercise the second option under section 11(4) (pensionable salary beyond Rs15,000) must do so within four months, the court said.
Eligible employees who were not able to join the scheme as per the cut-off date will be given an additional chance as there was a lack of clarity on the issue in view of the judgement of the various high courts, it added. This option will not be available to those who retired before the cut-off date.
The bench held as invalid the condition that required employees to make an additional contribution of 1.16% on salary exceeding Rs15,000.
While it suspended the provision for six months, as a “stop gap measure”, it held that employees opting for an enhanced pensionable salary will pay the 1.16% contribution.
“We suspend the operation of this part of our judgement for a period of six months so that the legislature may consider the necessity of bringing appropriate legislative amendments on this count,” it said.
“The said sum shall be adjustable on the basis of the alteration to the scheme that may be made,” it said on the “stop-gap measure”.
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