The EPFO in its circular[1] dated 13 December 2023 has issued the revised FAQs for implementation of judgment of Hon'ble Supreme Court dated 4 November 2022 on higher pension. The circular provides clarity on following key aspects:
- Requirement
to obtain permission under Para 26(6) to claim higher pension option – the FAQs clarify that higher
pension application will not be rejected even where such permission is not
obtained by the employee. The Regional Provident Fund Commissioner is
required to obtain required details from the employer to substantiate that
the contributions were made on higher salary (full basic salary exceeding
the ceiling limit) in the past so that it can be confirmed that the
employee is eligible for higher pension option.
- Calculation
of pensionable salary for calculation of higher monthly pension – the FAQs clarify that an employee
who is eligible for monthly pension after 1 Sep 2014, last 5 years’
average basic salary will be considered for determining pensionable salary
for calculation of monthly pension payout.
The formula for calculation of monthly pension is: (Pensionable salary X Pensionable service) / 70. - Higher
pension in future
– the FAQs clarify that for a member retiring in future (say for example
2030), the pension will be calculated based on the provisions of the
Pension Scheme that will exist as on the date of commencement of pension.
- No set off of arrears higher pension payout
against higher contributions – the FAQ clarifies
that for an individual eligible for higher monthly pension payout from the
EPFO for the past period as arrears – such arrears of pension will be paid
to the individual in accordance with the existing process. This will
assist EPFO to comply with TDS requirement on such arrears pension payout.
Such arrears will not be adjusted against dues if any from the individual
for reallocation of funds required from the Provident Fund Scheme to the
Pension Scheme where the individual has already claimed lump-sum
withdrawal from the Provident Funds Scheme or funds in the Provident Fund
Scheme are insufficient.
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