Employees Pension Scheme related provisions under the Code on Social Security notified; employer’s contribution towards joint option under EPS increased from 8.33% to 9.49% of pay

The Ministry of Labour and Employment (“MoLE”) has notified the following by invoking powers under the Code on Social Security, 2020 (“Code”) which relate to the Employees’ Pension Scheme, 1995.

• in respect of members who exercised joint option for contributing under the provisions of paragraph 11 of the Employees’ Pension Scheme, 1995 and who are found eligible, the employer’s contribution has been increased to 9.49% of the basic wages, dearness allowance and retaining allowance of such member by increasing 1.16% from the extant 8.33%
• the increased contribution should be applicable to basic wages, dearness allowance and retaining allowance to the extent such basic wages, dearness allowance and retaining allowance exceed Rs. 15,000 per month.

The above-mentioned is retrospective in nature in line with the directions of the Hon’ble Supreme Court and shall be deemed to have come into force on the 1st day of September, 2014.

This is in-line with the judgment of the Supreme Court wherein it was held that all members who were in service prior to 1.09.2014 and continued to be in service on or after 1.09.2014 and who did not exercise joint option due to interpretation on cut-off date (but were entitled to do so), ought to be given a further chance to exercise their option.

The Ministry of Labour has notified the following provisions of the Code (please refer to the attached Notification for details) :

1. Schemes under Section 15 (3): This section of the Code enumerates that Central Government through a Notification can frame a scheme to be called the Employees’ Pension Scheme to provide the following:

• • superannuation pension, retiring pension or permanent total disablement pension to the employees of any establishment or class of establishments to which this Chapter applies.
  • widow or widower’s pension, children pension or orphan pension payable to the beneficiaries of such employees; and
  • nominee pension.

2. Funds under Section 16(1) (a): The Employees’ Pension Scheme establish a Pension Fund into which there shall be paid, from time to time, in respect of every employee who is a member of the Pension Scheme:

• • such sums from the employer’s contribution not exceeding eight and one third per cent. of the wages or such per cent. of wages as may be notified by the Central Government;
  • such sums payable as contribution to the Pension Fund, as may be specified in the Pension Scheme, by the employers of the exempted establishments under section 143 to which the pension scheme applies.
  • such sums as the Central Government after due appropriation by Parliament by law in this behalf, specify;

3. Power to exempt establishment under Section 143: Exemption to be granted to an establishment or class of establishments (including factory or other establishments under the control of Central Government or State Government or local bodies) or employees or class of employees, from any or all of the provisions of this Code or the scheme framed as may be specified in the notification and may renew for further period such exemption by like Notification.

4. Repeal under Section 164: Employees’ Provident Funds Scheme, 1952, the Employees’ Deposit Linked Insurance Scheme, 1976, the Employees’ Pension Scheme, 1995 and the Tribunal (Procedure) Rules, 1997 framed or made under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) and the rules, regulations and schemes made or framed under the Employees’ State Insurance Act, 1948 (34 of 1948), shall remain in force, to the extent they are not inconsistent with the provisions of this Code for a period of one year from the date of commencement of this Code.

To read the Notifications please write to us at inquiries@lexplosion.in.

Source: Ministry of Labour and Employment