The Supreme Court on Friday declared as legal and valid the provisions contained in the Employees’ Pension Amendment (Scheme), 2014, which capped the maximum pensionable pay (basic pay plus survivor’s allowance) at ₹15,000 per month. However, the court read down some of the provisions of the scheme. A bench of Chief Justice U U Lalit and Justices Aniruddha Bose and Sudhanshu Dhulia was hearing an appeal by the Employees’ Provident Fund Organization (EPFO) and the Union government challenging the judgments of the Kerala, Rajasthan and Delhi High Courts striking down the 2014 amendments when it made observations.
The provisions of § 11, paragraph 3 and § 11, paragraph 4 of the Employee Pension Insurance Scheme were amended by a government announcement dated August 22, 2014. They became effective on September 1 of the said year. While section 11(3) raised the maximum limit of retirement pay from ₹6,500 to ₹15,000, section 11(4) allowed employees to increase their retirement pay beyond ₹15,000. However, the provisions of Section 11, paragraph 4, were made available to employees only if they exercised their choice by September 1, 2014 (with the possibility of an extension for another six months) and paid an additional contribution, which was calculated at 1.16% of their salary.
“Accordingly, we hold and rule: The provisions contained in Notification No… dated August 22, 2014 are lawful and valid. So far as the present members of the fund are concerned, we have read certain provisions of the scheme applicable to their cases…,” the high court said. The bench noted that after the amendment, the maximum pensionable pay should have been kept at ₹15,000 per month, from the earlier cap of ₹6,500 per month.
Existing employees who have not availed the second option under Section 11(4) (retirement pay above ₹15,000) as on September 1, 2014, must do so within four months, the court said. Eligible employees who could not join the scheme on the cut-off date will get another chance as the issue was not clear enough in view of the judgments of various high courts, he added. This option will not be available to those who retired before the cut-off date.
The bench held the condition which required employees to pay an additional contribution of 1.16% on salary exceeding ₹ 15,000 as invalid. While it suspended the provision for six months, as a “suspension measure”, it ruled that employees opting for the increased retirement pay would pay a contribution of 1.16%. We are suspending this part of our judgment for a period of six months to allow the legislature to consider the need to make appropriate legislative changes in this regard,” it said. “The said amount will be adjustable based on the scheme change that may be made,” the statement said of the “interim measure”.
