The Honourable Supreme Court has dismissed the Special Leave Petition filed against the judgment of Kerala High Court and thereby, setting aside the Employee’s Pension (Amendment) Scheme, 2014. The amendment had set Rs. 15,000/- as the maximum ceiling limit to be paid as a pension per month. The Bench comprising of CJI Ranjan Gogoi, Justice Deepak Gupta and Justice Sanjiv Khanna rejected the SLP filed by the Employees Provident Fund Organization on the ground that there is no merit in the matter.

Last year, the Kerala High Court had allowed the writ petition filed by the employees of numerous establishments covered by the Employee’s Provident Funds and Miscellaneous Provisions Act, 1952. Their grievance as concerning the amendment in the Employee Pension Scheme because the amendment seeks to drastically reduce the pension payable to the employees.

The Amendment had introduced the following changes in the pension scheme:-

Maximum ceiling limit is fixed at Rs. 15,000/-. The Scheme was further amended by a subsequent notification i.e., the Employee’s Pension (Fifth Amendment) Scheme, 2016. The amendment stated that the pensionable salary for all the existing members who prefer a fresh application shall be based on the higher salary.     

Confers an alternative to all the existing members as on the date 1/9/14 to file a fresh application together with the employer for continuing to contribute on a salary exceeding Rs. 15,000/- p.m. In case, the employee decides to opt for it, he has to further contribute @ of 1.16% on the salary exceeding Rs. 15,000/-. The option can be exercised within a period of six months from 1/9/14 only. The Regional Provident Fund Commissioner has been empowered to condone the omission for another period of six months. Where no such option is exercised, with respect to all those contributions made in excess of the wage ceiling limit, the same shall be diverted to the Provident Fund Account, along with the interest.        

Provides for the determination of the monthly pension on a pro-rata basis up to 1st September 2014 at the maximum pensionable salary of Rs. 6,500/- and for the period thereafter at the maximum limit of Rs 15,000/- per month.  

Provides for the withdrawal of the benefits for a member who has not served the requisite period.  

The bone of contention of the Employee’s Provident Fund Organization before the High Court was that the payment of pension computed based on the contributions made on the actual salaries by the employees would lead to the depletion of the resources of the Pension Fund and would make the entire scheme unworkable. However, the High Court rejected the contention and held that such a provision was arbitrary and unsustainable.

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