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May 2023 update: Supreme Court judgement on higher pension based on EPS-95

May 5, 2023

Latest update on the impact that the Supreme Court judgement on higher pension based on EPS-95 will have on employees and employers.
Compensation Strategy & Design|Health and Benefits|Retirement|Ukupne nagrade |Benessere integrato

We are issuing another addendum to our previous note on the Supreme Court Judgement of November 4, 2022, that paved the way for a vast majority of employees to exercise the right to higher pension under the aegis of the Employees’ Pension Scheme, 1995 (EPS).

Provided below are some key updates and developments over the past few days:

Update 1: Deadline for application extended to 26 June 2023

Following requests from several employee unions and pensioners’ organisations, particularly due to the challenges faced in the online application process, the EPFO has now provided an extension for filing applications till 26 June 2023. The earlier deadline was set as 3 May 2023.

Potential implications:

  • The deadline extension provides additional time for employees to take a decision. The window till 3 May 2023 did not leave employers with much time to communicate and prepare for the change, given the short window and several ambiguities.
  • Moreover, there was confusion with respect to the requirement to upload permission under Para 26(6) of the EPF scheme, and therefore several employees were unable to apply online. The Kerala High Court in its interim order dated 12 April 2023 had directed the EPFO to dispense with the production of joint declaration under paragraph 26(6) of the EPF Scheme.
  • Given the Kerela High Court’s order, we understand that the EPFO may be accepting applications even without the prior permission under Paragraph 26(6). Till date, 12 lakh applications have been received by the EPFO.
  • Having said that, the EPFO is yet to clarify on the method of computation of pension under the higher wages. This is a critical item, which ideally the EPFO should clarify before the deadline (in case they intend to change the formula), in order to enable employees to take an informed decision.

Update 2: Additional contribution of 1.16% of PF salary

In its latest notification dated 3 May 2023, the Central Government has informed that, for employees who apply for higher EPS pension (and are found eligible), the employer contribution to the EPS will be 9.49% of PF salary (instead of 8.33% of PF salary). This additional contribution of 1.16% will be payable on the PF salary exceeding 15,000 per month. Moreover, this will apply retrospectively from 1 September 2014.

Potential implications:

  • The notification above is not clear on whether the additional 1.16% contribution to EPS will constitute an additional employer contribution; or will be carved out of the overall 12% contribution from the employer side. However, the official press release of the Ministry of Labour and employment dated 3 May 2023 mentions “…Accordingly, keeping in mind the letter and spirit of the EPF & MP Act and the Code, it has been decided to draw 1.16 % additional contribution from within the overall 12% of the contribution of the employers into the provident fund….”, effectively resulting in no incremental cost to employers.
  • This is an important development, which would mean that the amount to be diverted from the EPF to the EPS (both for past as well as for future) will increase, which will lead to a lower PF accumulation for employees at the time of retirement.
  • The calculation to determine the amount to be transferred from EPF to EPS can be complicated, as the mechanism will be different for service up to and from 1 September 2014 onwards.

Update 3: Deletion of application

In another circular dated 3 May 2023, the EPFO has informed that a new functionality to “Delete Application” will be available for members on the online portal. While this functionality will work only if the employer has not acted on the application to validate the option, the EPFO will also allow employees to rectify any error in their completed applications after they have been duly processed by the EPFO.

Potential implications:

This is a welcome move, as employees can review their existing application and supporting documentation submitted to the EPFO. This may perhaps, also provide an opportunity for employees to delete their application, in case they are not interested in pursuing the same any further after additional information has been released by the EPFO, e.g. the requirement of 1.16% additional contribution.

It is yet to be seen if the EPFO gives permission to delete an application in case the pension computation formula is changed later.

Update 4: Employer validation process

As part of the data validation process, the EPFO has asked employers to upload a file (through an online process) with the historical wage details of employees who have opted for the higher pension. The data submitted by the employers will be verified with the data available by the field officers at the RPFC, and accordingly, the necessary amount will be transferred across from EPF to EPS (if the data is found complete and accurate).

Potential implications:

  • As part of the online validation process for employers, one of the columns is to calculate the interest accumulated on the differential amount (between the EPS contribution on capped vs uncapped salary) for each wage month in the past. This requirement, along with the requirement to incorporate the additional contribution of 1.16% on the PF salary exceeding 15,000 per month, can make this calculation quite complicated. We recommend that employers set out a robust process to perform and validate these calculations.
  • Several employers may not have the historical salary details readily available with them. They may need to work jointly with the respective employees to obtain and verify this information.


In view of the above, WTW strongly recommends that employers assess the implications of the higher pension option and prepare for its implementation, along with the added complication of adjusting for 1.16% contribution retrospectively. There may be a need to conduct more employee awareness sessions, update the pension calculators and also evaluate the calculation methodology to determine the amount to be transferred from EPF to EPS.

WTW and its team of actuaries and regulatory experts, are available and will be happy to support you as required.

We will continue to monitor this space and share more updates when available. Please feel free to reach out to your WTW consultant or write to WTWIndia for any questions or guidance around understanding the impact of this judgement.

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