New EPS rules leave out clause on higher pension, Pg14

Key Highlights:

• The Employees’ Pension Scheme (EPS), 2026, approved by the EPFO, omits the clause allowing pension on higher salary, a feature of the EPS-1995.
• The omitted clause, paragraph 11 (4), was deemed "obsolete" following the implementation of the Code on Social Security in November 2025.
• In November 2022, the Supreme Court permitted EPS members to apply for higher PF pension due to issues with the 2014-2015 cut-off date interpretation.
• As of January 31, 2025, nearly all of the 15.24 lakh applications for higher pension had been processed, with 1.24 lakh pension payment orders issued.

Detailed Insights:

• The EPS-1995 initially aimed to support economically weaker workers, with the EPFO arguing that higher wage earners contributing more created a "reverse subsidy".
• Amendments in 2014 sought to correct this perceived anomaly, with the EPFO citing a net actuarial deficit in the Employees’ Pension Fund.
• Despite the omission in EPS-2026, the new Employees Provident Funds Scheme rules retain a provision for employees and employers to jointly request contributions on wages exceeding the ceiling.
• Employees can make "additional voluntary contributions," though employers are not obligated to match, as per paragraph 19 of the new rules.

Key Concepts Involved:

• Employees’ Pension Scheme (EPS): A social security scheme providing pension benefits to employees in the organized sector.
• Employees' Provident Fund Organisation (EPFO): The organization responsible for managing and administering the EPS and other social security schemes.
• Code on Social Security: A comprehensive law enacted to consolidate and amend the laws relating to social security with the goal to extend social security to all employees and workers either in the organised or unorganised sector.