Higher EPF pension: Extra 1.16% to be drawn from employers payout
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Higher EPF pension: Extra 1.16% to be drawn from employers' payout


Additional contribution of 1.16 per cent of basic wages for subscribers opting for higher pension will be managed from employers’ contributions to social security schemes run by retirement fund body EPFO.

“It has been decided to draw 1.16 per cent additional contribution from within the overall 12 per cent of the contribution of the employers into the provident fund,” a labour ministry statement issued late in the evening on Wednesday (May 3) said.

The ministry said that the spirit of the EPF & MP Act as well as the Code (Code on Social Security) do not envisage contribution from the employees into the pension fund.

Also read: Over one lakh employees opt for higher pension under EPS 95

At present, the government pays 1.16 per cent of basic wages of up to ₹15,000 (threshold basic wage) as subsidy for contribution towards Employees Pension Scheme (EPS).

The employers contribute 12 per cent of basic wages towards social security schemes run by the EPFO. As much as 8.33 per cent out of the 12 per cent contributed by the employers goes into the EPS and the remaining 3.67 per cent is credited into the Employees Provident Fund.

Now all those EPFO members who are opting to contribute on their actual basic wage which is higher than the threshold of ₹15,000 per month for getting higher pension, will not have to contribute this additional 1.16 per cent towards EPS.

“This provision is retrospective in nature, in line with the directions given by the Supreme Court,” the ministry said.

“Accordingly, the Ministry of Labour & Employment has issued two notifications on 3rd May, 2023 implementing the above (decision),” it stated.

All directions of SC judgment complied with

The ministry said that with the issue of the notifications, all the directions of the Supreme Court contained in the judgment on November 4, 2022 have been complied with.

Also read: EPFO extends deadline to opt for higher pension

The Supreme Court had held the requirement of the members to contribute at the rate of 1.16 per cent of their salary to the extent such salary exceeds ₹15,000 per month as an additional contribution under the amended scheme to be ultra vires of the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (EPF & MP Act).

The apex court had directed the authorities to make necessary adjustments in the Scheme within a period of six months.

(With agency inputs)

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