Supreme Court Clears Way For Pension To Increase Manifold For All Private Sector Employees
Supreme Court paves way for higher pension for employees in all firms
The Supreme Court of India on Monday dismissed the Special Leave Petition filed against a Kerala High Court Judgment to set aside Employee’s Pension (Amendment) Scheme, 2014 and asked Employees Provident Fund Organisation (EPFO) to provide pension to all retiring employees.
Dismissing the plea filed by EPFO, The Supreme Court of India has ensured higher pension for all private sector employees and ruled saying that organisation to pay full pension to retire employees on the basis of their total salary instead of capping the amount on which the contribution of a pensioner is calculated at a maximum of Rs 15,000 per month.
The Court has not found any merit in the special leave petition. The apex court said in its judgment, “The same is, accordingly dismissed.” Notably, following this judgment, a pension of all the private employee will increase, the PF corpus will be reduced since the extra contribution will go to EPS and not PF.
It should be noted that the government’s Employees Pension Scheme was introduced in 1995 for the organised sector employees. The scheme is eligible to all employees covered under the EPF scheme. People who are covered under EPS receive a pension on a permanent basis. Every employee with a monthly salary combined with DA of Rs 15,000 or lesser, must be inducted into this scheme.
In this scheme earlier employer was supposed to contribute 8.33 % of their employee’s salary. However, this contribution was then capped at 8.33% of Rs 6,500. The government later amended the act and allowed a contribution to any percentage of the actual salary in case both employee and employer has no objection.
The act was amended by EPFO in 2014 and increased the contribution to 8.33% of a maximum amount of Rs 15,000. The amendment also included that the pension on full salary will be calculated as an average of last five years’ monthly income and not just in past one year’s salary. However, this amendment lowered the pension of many employees.
Read Supreme Court’s full judgment fora higher pension to all private sector employees here.