Pension hike

Author: admin

The stage is set for a manifold hike in pension for private-sector employees with the Supreme Court quashing a special leave petition filed by the Employees Provident Fund Organisation (EPFO) against a Kerala High Court directive to disburse pension to retiring employees on the basis of their full salary. Dismissing it, the apex court stated on Monday, “We find no merit in the special leave petition.”

Under EPS, introduced in 1995, an employer was supposed to contribute 8.33 per cent of the employee’s salary in a pension scheme. However, the EPFO amended it, making the contribution 8.33 per cent of a maximum of Rs 15,000, i.e. Rs 1,250. It also held that in case of those who availed pension on full salary, the pension would be the average of the past five years’ monthly salary, and not of the last year alone, thus reducing the amount. This amendment was set aside by the Kerala HC, which restored the old system of calculating pension on the basis of the past year’s monthly salary.

While the apex court’s move paves the way for an increase in pension, with the extra income being credited to the Employee Pension Scheme (EPS) rather than PF, the provident fund corpus is expected to dip marginally.

April 2019