NEW DELHI: The Employees' Provident Fund Organisation's (EPFO) stand refusing pension on full salary to employees of Exempt Companies despite a Supreme Court order on October 4, 2016, to do so is likely to attract strong opposition from members of the Central Board of Trustee (CBT) of the PF body in its meeting on Thursday.
Those companies, whose employees' fund is managed by private trusts are called Exempt Organisations and who- se fund is managed by the EPFO's trust are Un-Exempt ones. After the SC order, the EPFO agreed to give pension on full salary to the members of Employees' Pension Sche- me (EPS) without specifying whether they were from Exempt or Un-Exempt organisations with retrospective effect. But later, it decided to give it to employees' of Un-Exempt Organisations only.
A t present, the EPFO accepts contribution to EPS at 8.33% of salary with a ceiling at Rs 15,000 only and the pension is also given on the basis of Rs 15,000 per month. The ceiling was earlier at Rs 6,500. If the contribution is accepted on full salary, pension will also be given on the full average mo- nthly salary at the time of retirement. Pension payout on full salary is many times more than that calculated on the basis of the ceiling amount.
The EPFO, so far, has refused to accept contribution on full salary, saying that employees and employers should have taken permission from it within 6 months of salary crossing the given ceiling.
The SC had directed the EPFO to do away with the cap of 6 months to accept consent to contribute to EPS on full salary. In fact, two of the 12 petitioners who won the case in SC were from an Exempt Company. CBT member and INTUC office bearer Ramen Pandey said the EPFO got cold feet to give pension on full salary to the employees of Exempt Organisations after accepting it and issuing a circular on March 23 this year to give pension to all the employees on full salary. A number of board members were also critical of the EPFO's move in denying a higher pension to all EPS members.
In its 215th meeting on December 8, 2016, the CBT had decided that members of Exempted Organisations will be given pension on full salary provided they transfer the differential of contribution on the full salary and the ceiling amount with interest from the EPF account to the EPS account, which is managed by the EPFO trust. If the person has already retired, he will have to deposit the money with interest at the rate fixed by the EPFO every year.
On the basis of the CBT's decision, the EPFO moved the ministry of labour and employment (MOL&E) for its approval, which it received on March 16 this year.
After receiving the government's approval, the EPFO issued a circular on March 23 to give pension on full salary to EPS members. In the circular, it said, "Accordingly a proposal was sent to MOL&E to allow members of the Employees' Pension Scheme, 1995 who had contributed on higher wages exceeding the statutory wage ceiling of Rs 6,500/- in the Provident Fund to divert 8.33% of the salary exceeding Rs 6,500/- to the Pension Fund with up to date interest as declared under EPF Scheme, 1952 from time to time to get the benefit of pension on higher salary on receipt of joint option of the Employer and Employee.''
It further said, "The MOL&E vide letter dated 16.03.2017 has conveyed its approval to allow members of the Employees' Pension Sche- me, 1995" to give pension on full salary." The circular directed the officers in charge of field offices to take necessary action to implement it. But later, the EPFO developed cold feet and directed its officials not to accept applications with retrospective effect from employees of Exempt Organisations to give pension on full salary.
Now, the EPFO in documents circulated internally is arguing that for those employees whose EPF has also come to the EPFO trust, the PF body could transfer the surplus money to the EPS account. But it can't accept the transfer of money from private trust to EPS account. T he CBT Thursday will discuss the issue. CBT member Pandey said the EPFO cannot reverse the earlier decision of CBT and that of the ministry on its own .