Kerala HC stops EPFO from reducing 41 petitioners' higher PF pension
New Delhi, Jan 30, 2025
The order came in response to a writ petition filed by 41 pensioners that challenged the EPFO's 2014 pro-rata order
The Kerala High Court has directed the Employees' Provident Fund Organization (EPFO) that the higher provident fund (PF) pension currently drawn by some pensioners should not be reduced based on the pro-rata condition.
The order, issued by Justice Murali Purushothaman, came in response to a writ petition filed by 41 pensioners. The petition challenged the pro-rata order issued by the EPFO in 2014. Under the pro-rata method, the EPFO splits a pensioner's service tenure into two parts — one before and the other after September 1, 2014 — and calculates the pension separately for each period.
Rohitaashv Sinha, Partner at corporate law firm King Stubb & Kasiva, Advocates and Attorneys explained that the instant interim order was passed in the Balakrishna case. The case arises from the letter circulated by the EPFO to the employees who were receiving a higher pension due to their exercise of an option for getting a higher pension based on their actual salary. Previously the Employees’ Pension Scheme, 1995 (EPS) had capped the wage ceiling to Rs 6,500 for the purpose of pensionable salary, which was increased to Rs 15,000, Sinha said.
An amendment dated August 22, 2014, was brought, wherein the exercise of a fresh option on account of an increased wage ceiling was introduced. The amendment also stated that the pensionable salary shall be calculated on a pro-rata basis separately for the period up to August 31, 2014, up to the wage ceiling of Rs 6,500 per month and for a subsequent period up to the wage ceiling of Rs 15,000 per month. An option was also given to the employees to contribute on a salary exceeding Rs 15,000 by exercising a fresh option, Sinha said.
The Kerala High Court issued interim directions to the EPFO not to curtail the higher pension benefits being drawn by the petitioners till two months from the date of the order. The final adjudication or decision on the calculations based on the pro-rata scheme is yet to be made, said Manmeet Kaur, Partner at law firm Karanjawala & Co.
“It will benefit users with the interim relief until the question of law on the applicability of the pro-rata method of calculation of pension which was introduced through the 2014 amendment. Until the said question is decided, the users will benefit from a higher pension payout each month without paying the refund sought by the EPFO,” said Amit Kumar Nag, Partner at law firm AQUILAW.
[The Business Standard]
