Your bumper EPS dream may crash as EPFO plans to move SC
The EPFO is reportedly planning to drag high court in the Supreme Court for its ruling on a pension. As per the existing rules, an individual is entitled to get a cover by the Employees’ Pension Scheme of the EPFO.
Well, if you were delighted and celebrating the chances of getting a higher pension from the Employees Provident Fund Organisation (EPFO) after a recent Kerala High Court ruling, you should read this. The EPFO is reportedly planning to challenge the high court decision in the Supreme Court. As per the existing rules, an individual is entitled to get pension under the Employees’ Pension Scheme (EPS) of the EPFO.
Earlier, the salary cap used to calculate pension was fixed at Rs 15,000 per month. However, the Kerala HC had ordered the retirement body to pay the pension on full salary of the employees, removing the current cap. According to a report by The Economic Times, the EPFO officials have argued that the monthly contribution to the EPS pool is very low. Hence, the organisation will not be able to pay higher pensions.
The officials have also argued that the EPFO is facing a cash crunch, which has already forced it to give up on plans to double minimum pension from Rs 1,000 to Rs 2,000. Also, shifting money from Provident Fund accounts to the EPS will create arrears of previous years, for which the computation process in the books, will become hectic for EPFO.
Currently, employees contribute 12% of their Basic salary to Provident Fund. An equal contribution by their respective employers is also made. Out of that 12% contributed by the employer, 8.33% in invested in the EPS and the same amount is capped at Rs 1250 per month.
If the worker seeks a higher pension equal to 50 per cent of his last drawn salary, the whole 8.33 per cent of the basic salary will need to be deposited towards EPS.