In 1995, the Government introduced a pension scheme under Section 6A of the EPF Act. The Employees Pension Scheme, 1995 (EPS-95) provided that the employer’s contribution of 8.33% should be towards the pension scheme. The EPS-95 capped the maximum monthly pension at Rs.5,000 or Rs.6,000. Thus, employers had to contribute 8.33% of Rs.5,000, which was later raised to Rs.6,500, towards the pension scheme.
In March 1996, a provision was added to para 11(3) of the EPS-95, giving the employer and employee an option to contribute 8.33% of actual salary (above the cap of Rs.5,000 or Rs.6,500) to the EPS. Such a higher salary would be considered a pensionable salary. However, the EPFO gave six months for the employees to file a joint option form for higher pension contributions to the EPS.
The government amended the EPS-95 scheme effective from 01/09/2014. It increased the maximum pensionable salary to Rs.15,000. It also omitted the provision to para 11(3), i.e. exercise of the option by the employer and employee to contribute EPS on a higher salary amount.
Thus, employers would make an EPS contribution of 8.33% on a maximum of Rs.15,000 for the employees joining the EPF scheme after 01/09/2014, even when they draw a higher salary.
However, the employees who were part of EPS-95 or joined before 01/09/2014 could contribute 8.33% to EPS on the actual salary as against the cap of Rs.15,000 if they filed a new joint option with the EPFO within six months, i.e. 28/02/2015.
There were issues after the 2014 amendment regarding pension contributions on higher salaries. Many employees stated that they did know about the exercise of the joint option for contributing pension on the higher salary amount. The EPFO rejected the joint option filed by many employees. Employers contributed 8.33% of pension on employees’ actual salaries without filing the joint option, but the pensionable salary was taken as Rs.15,000 for pension calculation.
Thus, many employees filed cases in High Courts for receiving higher pensions based on the contributions made on actual salary amounts. The Supreme Court took up this matter. The summary of the Supreme Court decision is as follows:
| Status of Employee | Exercise of joint option | Eligibility to claim 8.33% pension contribution on a higher salary | Mode of higher pension claim |
| Employees in service as on 01/09/2014 | Exercised joint option and rejected by the EPFO | Yes | By filing a higher pension claim application |
| Employees in service as on 01/09/2014 | Not exercised joint option but contributing to EPS above the cap of Rs.5,000/Rs,6,500 | Yes | By exercising the joint option |
| Employees retired before 01/09/2014 | Exercised joint option and rejected by the EPFO | Yes | By filing a higher pension claim application |
| Employees retired before 01/09/2014 | Not exercised joint option | No | Not applicable |
The Supreme Court provided that employees who were part of the EPF before 01/09/2014 but have not exercised the joint option can exercise it within 03/05/2023. The EPFO further extended the due date to 11/07/2023. For such employees, a higher EPS contribution will be calculated from the date of their joining.
For example:
- Mr. ‘X’ became a member of the EPF in 1998.
- He has not exercised the joint option.
- His salary increased to Rs.50,000 in 2015.
- His employer contributes Rs.6,000 (i.e. 12% of his basic wage) towards EPF.
- Of the employer’s contribution, Rs.1,250 (i.e. 8.33% of Rs.15,000; the statutory wage cap) will go to the EPS.
- The remaining Rs.4,750 (i.e. Rs.6,000 – Rs.1,250) will go to the EPF.
- He exercises the joint option within 11/07/2023 as per the Supreme Court judgement since the EPS contribution is above the statutory wage cap of Rs.6,500.
- After submitting the joint option, his employer will contribute Rs.4,165 (i.e. 8.33% of Rs.50,000; his actual salary) and Rs.1,835 (Rs.6,000 – Rs.4,165) towards EPF.
- The EPFO will calculate the monthly EPS amount of 8.33% of the actual salary and transfer the difference amount from the EPF to the EPS.
In such cases, the EPFO will return to the joining date or 01/11/1995, whichever is later, and transfer the difference from the PF account to the EPS account. But, the higher pension contribution will reduce the EPF lumpsum corpus that the employee gets upon retirement.
How to track EPFO higher pension application status?
You can check the status of the EPFO higher pension application by following the below steps:
Step 1: Visit the EPFO Unified Member portal.
Step 2: Click on the ‘Track Application Status for Pension on Higher Wages’.
Step 3: On the next page, click on ‘Click Here’ under the ‘Track application status for Pension on Higher Wages’ tab.
Step 4: Select and enter the application acknowledgement number, UAN number or PPO number.
Step 5: Enter the Captcha code, tick the consent and click on the ‘Get OTP’ button.
Step 6: Enter the OTP and click on ‘Get Status’. The application status will be displayed on the screen.
EPF higher pension eligibility
EPFO issued a circular in December 2022 providing the eligibility criteria and application process for claiming a higher pension. Below are the eligibility criteria for a higher pension:
- The employees retired before 01/09/2014.
- The employees exercised the joint option under para 11(3) of EPS-95 while being a member of EPS-95.
- The employees and employers contributed EPS on salaries exceeding the wage ceiling of Rs.5,000 or Rs.6,500.
- The EPFO declined the exercise of such an option.
However, the EPFO circular did not provide a higher pension option for employees who were part of the EPF before 01/09/2014 but still working/retired after 2014. As per the Supreme Court judgement, such employees were also eligible to claim a higher pension.
Thus, the EPFO issued another circular in February mentioning higher pension eligibility criteria for employees in service/retired after 2014. Below are the eligibility criteria to file a joint option for getting a higher pension:
- The employees who were members before 01/09/2014 continued to be members after that date.
- The employees and employers contributed to EPS on salaries exceeding the wage ceiling of Rs.5,000 or Rs.6,500.
- The employees and employers were members of EPS-95 and did not exercise the joint option provided under the deleted para 11(3) of the EPS and amendment of 2014.
However, employees who were members of EPS-95 and exercised the joint options under the deleted para 11(3) of the EPS but did not file new joint options after the amendment of 2014 are not eligible to claim a higher pension. The EPS contributions of such employees will be 8.33% on the maximum amount of Rs.15,000, irrespective of their actual salaries.
EPF higher pension option form
The eligible employees who retired before 2014 can apply for a higher pension claim with the EPFO. They can apply for the higher pension claim online (as shown below) or with the regional EPF offices.
The eligible employees who joined EPS-95 but are retired/working after 2014 can apply the joint option form online (as shown below) or with the concerned regional EPF offices within 11/07/2023 to receive higher pensions.
How to apply for a higher pension in EPF?
Below is the step to claim a higher pension amount for employees retired before 2014:
Step 1: Employees need to visit the EPFO Unified Member portal.
Step 2: Click on the ‘Pension on Higher Salary: Online application for validation of Joint Option’ option.
Step 3: Fill in the details and submit the form.
The EPFO will digitally register each application and provide the receipt number to the applicant. It will forward the applications to the respective employers, who will verify them through e-sign/digital signature for further processing. The APFC/RPFC-II will examine the case and send the higher pension decision to the applicants via email, post, phone or SMS.
The field officers will examine the application form. If the form is complete, the wage details submitted by the employers will be verified with the the field offices data. Where the field officers data and employers’ details match, the dues will be calculated and an order will be passed by RPFC-II/RPFC-I/APFC for depositing/transferring the dues. The cases where there is a mismatch, it will informed to the employer and the pensioner by the APFC/RPFC-II and one month time will be given to rectify the same.
In case the application form is not approved by the employer, an opportunity will be given to the employer to provide additional proof/evidence or correct any mistakes/errors before rejection of the form. Such opportunity will be given for a period of one month and under intimation to the pensioners.
How to apply for a joint option online pension form in EPF?
Below is the step to exercise/apply for joint option under para 11(3) and para 11(4) of EPS-95 to claim for higher pension for employees who are part of EPS-95 but are working or retired after 2014:
Step 1: Employees need to visit the EPFO Unified Member portal.
Step 2: Click on the ‘Pension on Higher Salary: Exercise of Joint Option under para 11(3) and para 11(4) of EPS-1995 on or before 3rd May 2023’ option.
Step 3: Fill in the details and submit the form.
The field officers will examine the joint option forms. If the form is complete, the wage details submitted by the employers will be verified with the the field offices data. Where the field officers data and employers’ details match, the dues will be calculated and an order will be passed by RPFC-II/RPFC-I/APFC for depositing/transferring the dues. The cases where there is a mismatch, it will informed to the employer and the employee by the APFC/RPFC-II and one month time will be given to rectify the same.
In case the join option is not approved by the employer, an opportunity will be given to the employer to provide additional proof/evidence or correct any mistakes/errors before rejection of the form. Such opportunity will be given for a period of one month and under intimation to the employees.
EPFO guidelines for higher pension
- The joint option/higher pension claim application should contain a disclaimer or declaration.
- An employee should give explicit consent in the joint option/application form for a share adjustment from PF to EPS and a re-deposit of the amount.
- An employee should give an undertaking of the trustee for a share transfer of funds from exempted PF trust to the EPFO pension fund. The undertaking will be effective for the deposit of due contribution and interest up to the payment date within the specified time.
- The employer’s contribution share refund will be deposited with the interest rate declared under para 60 of the EPF Scheme, 1952, for employees of unexempted establishments.
- The following documents should be submitted with the higher pension claim application:
- Proof of joint option verified by the employer filed under para 26(6) of the EPF scheme.
- Proof of joint option verified by the employer filed under para 11(3) provision.
- Proof of remittance of EPS contribution in the PF account exceeding the current wage limit of Rs.6,500 or Rs.5,000.
- Written refusal of APFC or EPFO to such remittance or request.
- The following documents should be submitted with the joint option application:
- Proof of remittance of EPS contribution in the PF account exceeding the current wage limit of Rs.6,500 or Rs.5,000.
- Proof of joint option verified by the employer filed under para 26(6) of the EPF scheme.
- The EPFO will issue further circulars regarding the deposit method and pension computation.
- An employee can raise a complaint on EPFiGMS when they face a grievance to get a higher pension after submitting the application and payment of the due contribution if any.
EPF higher pension calculation formula
Calculation of higher pension for employees retired before 2014:
The average monthly pay earned during the contributory period of service in the 12 months before leaving EPFO is considered to determine the pension amount.
Calculation of higher pension for employees retired after 2014:
The average monthly pay earned during the contributory period of service in the 60 months before leaving EPFO is taken into account to determine the pension amount.
Current formula for calculating pension under the EPS scheme is as follows:
(Average salary of 60 months x service period)/70
Latest Update
Employees Pension Scheme 1995 amended to provide withdrawal benefit to members having less than 6 months service; Amendment to benefit more than 7 lakh EPS members every year
Government of India has amended the Employees’ Pension Scheme (EPS), 1995 to ensure that EPS members with less than 6 months of contributory service also receive withdrawal benefit. This amendment will benefit more than 7 lakh EPS members every year who leave the scheme with less than 6 months of contributory service.
Further, the Central Government has modified the Table D and has ensured that every completed month of service rendered is taken into account to give proportionate withdrawal benefit to the members. The amount of withdrawal benefit will henceforth depend upon the number of completed months of service rendered by the member and the wages on which EPS contribution was received. The above measure has rationalized the payment of withdrawal benefit to members. It is estimated that every year more than 23 lakh members will benefit from this modification of the Table D.
Every year, lakhs of EPS 95 members leave the scheme prior to rendering the requisite 10 years of contributory service for pension. Such members are given withdrawal benefit as per the provisions of the Scheme.
More than 30 lakh withdrawal benefit claims were settled in the financial year 2023-24.
Till now, the withdrawal benefit was being calculated on the basis of the period of contributory service in completed years and the wages on which EPS contribution has been paid.
Therefore, only after completing 6 months and above of contributory service, the members were entitled for such withdrawal benefit. Consequently, the members leaving scheme, before contributing for 6 months or more, used to get no withdrawal benefit. This was a cause of many claim rejections and grievances as many members were exiting without having less than 6 months of contributory service. During the financial year 2023-24, approximately 7 lakh claims for withdrawal benefits were rejected due to contributory service being less than 6 months. Henceforth, all such EPS members who have not attained the age of 58 years as on 14.06.2024 will become entitled for withdrawal benefit.
Earlier, the calculation under erstwhile Table D ignored the fractional period of service rendered for less than 6 months after each completed year. This resulted in lesser amount of withdrawal benefit in many cases. With the modification of Table D, the Contributory service for calculating the withdrawal benefit will be now considered in completed months. This will ensure fair payment of withdrawal benefit. E.g. a member taking withdrawal benefit after 2 years and 5 months of contributory service & wages of 15,000/- per months was earlier entitled to Rs. 29,850/- withdrawal benefit. Now he will receive Rs. 36,000/- withdrawal benefit.