According to Times of India (TOI) Employees' Provident Fund Organization (EPFO) opened its unified portal to subscribers so they can sign up for higher pensions, but EPFO added cumbersome application processes that make it nearly difficult to apply. 

 

The clause stipulates that in order to exceed the statutory limit for provident fund contributions under the Employee Provident Fund (EPF) Plan, 1952, employees and employers must have jointly requested EPFO's prior approval.

 

The PF contribution ceiling has increased over time by the government from Rs 5,000 until June 2001 to Rs 6,500 and then to Rs 15,000 as of September 2014.

 

This means that, despite the cap, you are still allowed to contribute 12% of your actual basic salary to PF, with the employer contributing the same amount. But this could be done only if the employer and the employee had received prior permission from EPFO.

 

In response to a RTI question on how many employees or members exercised the joint option under the provision - Para 26(6) from March 16, 1996 - EPFO said, "As per available office records there are 'NO' joint options/ undertaking received in writing under Para 26(6) of EPF Scheme, 1952 during the period from March 16, 1996 to December 31, 2022."

 

According to EPFO, there are no records of the total number of current employees, retirees, or pensioners who have exercised the joint option under this clause as of March 31, 2022. 

 

According to TOI, EPFO has now resurrected this clause, which threatens to defeat the goal of the apex court's order - allowing subscribers to the Employees' Pension Scheme to opt in for pension based on the average actual basic salary for the last five years of service. This comes in response to the recent Supreme Court ruling, which has opened a four-month window to opt for the higher pension option.

 

If the ruling is put into effect, a person who has been an EPFO member for 33 years may be eligible to receive up to 50% of the five-year average as a pension, assuming they can follow the rules.

 

According to the TOI experts on the matter said that the retirement savings agency has decided to implement the provision of "prior approval" for PF contribution based on your actual basic salary with retrospective effect when the SC order had not specifically referred to it.

 

According to TOI the provision is anticipated to make it more difficult for subscribers to choose a higher pension because such permissions from the agency are uncommon despite the fact that employees and their employers have been making contributions for decades on their actual or higher salaries.

 

For instance, the majority of companies that have their own provident fund trusts make contributions based only on the actual salaries of their employees.In actuality, EPFO has been pocketing administrative fees on these payments based on actual incomes for years while remaining silent about the EPF Scheme's provision. 

 

In fact, EPFO has taken similar charges from private trusts as well as from employees of non-exempt organisations, whose contributions are handled directly by regional PF commissioners, in many situations.

 

Even in these situations, contributions have been given without previous approval from EPFO based on actual salary.

 

Experts and HR executives, according to TOI, note that in January 2019, an EPFO circular to regional PF commissioners requested that they refrain from enforcing compliance with the provision under Paragraph 26(6) of the EPF Plan, 1952. 

 

"...if an employer and employee have contributed under the EPF Scheme, 1952 on wages higher than the statutory wage limit, without joint option of employee and employer, and the EPF Account of the concerned employee has been updated by EPFO on the basis of such contribution received, then by action of employee, employer and EPFO, it can he inferred that joint option of employee and employer has been exercised and accepted by EPFO," the January 22, 2019 EPFO circular signed by Central Regional PF Commissioner Rajesh Bansal had said.

This circular, however, was summarily withdrawn less than a month later without adequate explanation.

 

According to TOI, applicants and experts are perplexed by the EPFO's recent rulings' insistence on strict compliance with Para 26(6).An asset manager informed TOI that the EPFO's action will exclude a sizable portion of employees who are eager to choose a higher pension because neither they nor their employers have the approvals being sought at this time. EPFO did not respond to repeated attempts for clarification.

 

According to TOI during an interaction with CII representatives, regional PF commissioner Aparajita Jaggi did not explain why permission from EPFO was being made a necessary pre-condition to exercise the higher pension option.