You can now apply for a higher pension: Decoding EPFO's latest guidelines

Government retirement fund body Employees’ Provident Fund Organisation (EPFO) has now 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 per cent of the ‘actual basic salary’ towards pension under the Employee Pension Scheme (EPS).
The EPFO’s new guidelines come two weeks before the end of the four-month deadline set up by the Supreme Court to enable eligible subscribers to opt for higher pensions under EPS.
The deadline to apply for higher pension under EPS was March 3, 2023 as mandated by the Supreme Court judgement.
The EPFO has floated a new option for subscribers who couldn’t opt for higher pensions earlier. Under the new option, employees will have the option to let their employers deduct a sum equal to 8.33 per cent of the actual basic salary towards the EPS pension.
In 2014, pensionable salary cap was increased from Rs 6,500 per month to Rs 15,000 per month by the EPS amendment of August 2014. The same amendment also allowed members and their employers to jointly contribute 8.33% of their actual salaries towards EPS, if exceeding the cap.
But there was a slight issue:
While the Centre had raised the pensionable salary cap under EPS to Rs 15,000 from Rs 6500 through an amendment in 2014, employers and members were required to contribute 8.33% of the actual salaries towards the scheme if it exceeded the cap. The EPFO provided all EPS members a six-month window to opt for the amended scheme for higher pension. However, several subscribers missed this opportunity. Hence, a new window has been provided based on a Supreme Court judgement in November 2022.
“…all the employees who did not exercise option but were entitled to do so but could not due to the interpretation on cut-off date by the authorities ought to be given a further chance to exercise their option,” the apex court said in its judgement dated November 4, 2022.
How can you opt for the higher pension?
An employee and an employer can now sign up together, requesting the EPFO to deduct 8.33 per cent of the higher monthly basic salary as against the ceiling of Rs 15,000) towards in order to ensure a larger accumulation towards pension. Point to note: This will require reallocation of corpus from the Employees’ Provident Fund to Employees’ Pension Scheme from the date of joining membership under these schemes.
The latest circular said an online facility will be provided for employees who continued to be a subscriber of EPS on or before September 1, 2014, details of which will be informed shortly.
“Once received, the Regional PF Commissioner shall put up adequate notice on the notice board and banners for wider public information,” the circular said.
The Supreme Court in its decision dated 4 November has provided members who were registered before 1 September 2014, and have not yet retired, an additional period of four months to request for dual option and avail of higher pension.
In January 2023, EPFO had issued instructions for re-examination of cases of employees who drew higher pension based on actual wage and retired prior to September 2014 but had not opted for pension linked to higher wage with the retirement fund body.
Who is eligible?
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
How to apply?
The eligible subscribers would have to apply jointly with their employer for the enhanced benefit in the application form prescribed by the commissioner and all other required documents like joint declaration etc.
More details related to timelines of the application process will be provided by the Regional PF Commissioners soon.
All applications will have to be digitally logged, for which a separate URL facility will be provided by the EPFO.
The office in-charge of the concerned regional provident fund office shall examine each case of joint option on higher salary and intimate the decision to the applicant through e-mail/post and later through SMS.
Any grievance by the applicant can be registered on EPFiGMS (grievance portal) after submission of his joint option form and payment of due contributions
Guidelines laid down by EPFO:
The request will be made in such form and manner, as may be decided by the Regional Provident Fund Commissioner.
The joint option will contain the disclaimer and declaration as may be specified theirein.
In case of share requiring adjustment from Provident Fund to pension Fund and if any redeposit to the fund, explicit consent of the employee will be given in the joint option form.
In case of transfer of funds from exempted provident fund trust to pension fund of EPFO, an undertaking of the trustee shall be submitted. The undertaking shall be to the effect that due contribution along with interest up to the date of payment, will be deposited within the specified period.
In case of employees of unexempted establishments, refund of requisite employer’s share of contribution, the same shall be deposited with interest at the rate declared under para 60 of EPF Scheme, 1952, till the date of actual refund.
The join option must contain the proof of remittance of employer’s share in Provident Fund on higher wages exceeding the prevalent wage ceiling of Rs 5000/Rs 65000 and proof of joint option under Para 26 (6) of EPF Scheme duly verified by the employer.
The application will land into the employer’s login whose verification with Digital Signature/e-Sign will be essential for further processing.
What is the EPF contribution rule?
Currently, employees and employers contribute 12% of the employee’s basic salary and dearness allowance towards EPF. While the employee’s entire contribution goes towards EPF, the employer’s 8.33% contribution goes to EPS and 3.67% to EPF.As a member of the EPF scheme, an employee is entitled to receive a lump sum at the time of retirement after attaining the age of 58 years.