The Employee Provident Fund Organisation (EPFO) may extend its deadline to apply for higher pension under the Employees' Pension Scheme (EPS) beyond May 3, experts told CNBC-TV18.com. This is required to get more clarity on various aspects, they said.
"An extension is extremely necessary in the present circumstances, since not only have claimants faced difficulties in availing the online filing option due to technical difficulties, but there is also a lack of clarity regarding the process to be followed and information to be submitted for claiming the higher pension amount," Vaibhav Bhardwaj, partner at IndusLaw said while speaking exclusively to CNBC-TV18.com.
Additionally, ambiguity is apparent in light of the recent judgment of the Kerala High Court in April 2023, which had directed the EPFO to omit the requirement to produce copies of the permission or prior consent or details thereof under Paragraph 26(6) of the EPF Scheme for the time being.
"There is also no clarity regarding the mechanism and calculations that will be followed for the reallocation of funds from the provident fund to the pension fund in case one opts for the higher pension. Further, employers also require guidance on practical matters, such as what employers should do if they do not have sufficient records of old wages," Bhardwaj said.
Echoing the same views, Sandeep Sehgal, partner, tax, at AKM Global, said the pension calculation formula, the manner in which the shortfall, if any, is to be deposited — especially where members are no longer in employment, among others — is yet not clear.
Notably, the EPFO in February introduced this new process to help employers and subscribers to jointly apply for higher pensions under the EPS, in compliance with Supreme Court's November 4, 2022 order. The deadline to apply for the same initially was March 3, 2023, which was later raised to May 3, 2023.
The EPFO order stated that existing employees and those who were members of EPS as on September 1, 2014, can claim higher pension based on actual salary beyond the prescribed ceiling in the EPS of 1995.
The EPFO has allowed subscribers to go beyond the pensionable salary capped at Rs 15,000 a month, on which employers deduct a sum equal to 8.33 percent of the ‘actual basic salary’ towards pension under EPS. Simply put, this means that an employee and an employer can sign up together, requesting the EPFO to deduct 8.33 percent of the higher monthly basic salary, thus ensuring larger accumulation towards pension over their work life.
According to the EPFO circular, the following employees along with their employers can submit the joint option to the concerned regional office:
Employees and employers who had contributed on salary exceeding the wage ceiling of Rs 5,000 or Rs 6,500
Employees and employers who did not exercise the joint option in the previous window while being EPS members
Employees who were members before September 1, 2014, and continued to be a member on or after that date.
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