Subscribers or pensioners opting for higher pension will get three months to give their consent for diverting additional contributions or dues under the Employees' Pension Scheme (EPS) run by the Employees' Provident Fund Organisation (EPFO), stated a circular on Thursday.

Earlier in November 2022, the Supreme Court asked the government to give subscribers four months for opting for a higher pension.

The EPFO provided an online facility to submit the joint option form (with employers) to the subscribers for opting for a higher pension till May 3, 2023. Later the deadline was extended until June 26, 2023.

There was a lack of clarity about how this additional higher contribution for exercising the option would be worked out and paid.

The members were also not aware whether they would be given the option to withdraw from the higher pension scheme in case the additional payout is exorbitant.

The circular has clarified that the additional outgo would be worked out by field officers and a cumulative amount along with the interest will be intimated to the subscribers who opt for higher pension.

It stated that "Pensioners/members may be given up to 3 months to deposit and to give consent for diversion of these dues (in prescribed format)." The field officers will intimate to pensioners or members about the additional dues needed to be paid for opting for a higher pension.

Earlier this month, the labour ministry also clarified that additional contribution of 1.16 per cent of basic wages for subscribers opting for higher pension will be managed from employers' contributions to social security schemes run by EPFO.

"It has been decided to draw 1.16 per cent additional contribution from within the overall 12 per cent of the contribution of the employers into the provident fund," a ministry statement said.

The ministry had explained that the spirit of the EPF & MP Act as well as the Code (Code on Social Security) do not envisage contribution from the employees into the pension fund.

At present, the government pays 1.16 per cent of basic wages of up to Rs 15,000 (threshold basic wage) as a subsidy for contributions towards Employees Pension Scheme (EPS).

The employers contribute 12 per cent of basic wages towards social security schemes run by the EPFO.

As much as 8.33 per cent out of the 12 per cent contributed by the employers goes into the EPS and the remaining 3.67 per cent is credited into the Employees Provident Fund.

Now EPFO members who are opting to contribute on their actual basic wage which is higher than the threshold of Rs 15,000 per month for getting a higher pension, will not have to contribute this additional 1.16 per cent towards EPS.

This provision is retrospective in nature in line with the directions given by the Supreme Court, the ministry had said.

Accordingly, the Ministry of Labour & Employment issued two notifications on 3rd May 2023 implementing the above (decision), it had stated.

The ministry had said that with the issue of the notifications, all the directions of the Supreme Court contained in the judgment on November 4, 2022, have been complied with.

The Supreme Court had held the requirement of the members to contribute at the rate of 1.16 per cent of their salary to the extent such salary exceeded Rs 15000 per month as an additional contribution under the amended scheme to be ultra vires of the provisions of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (EPF & MP Act).

The apex court directed the authorities to make necessary adjustments to the scheme within a period of six months.

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