EPF Higher Pension Scheme: Guidelines, Eligibility, Benefits & Calculation

Members of the Employees’ Provident Fund Organization (EPFO) are eligible for a pension upon retirement. Presently, 12% of each employee’s basic salary and dearness allowance is contributed by their employers to the EPF. 8.33% of the 12% employer contribution goes to the Employees’ Pension Scheme (EPS) and 3.67% to the Employees’ Provident Fund (EPF).

Nevertheless, even if the employee receives a greater pay, the 8.33% EPS contribution is only allowed to go up to a maximum of Rs. 15,000. In 2014, an update to the EPS brought about the cap on EPS contributions.

Employees had the opportunity to pick greater EPS contribution amounts prior to the 2014 EPS amendment. The EPFO circular on enhanced pensions and accompanying claim procedure are covered in this article.

What is the EPF higher pension scheme?

The Employee Pension Scheme (EPS-95) stipulated that employers must contribute 8.33% of the salary towards the pension fund, with a cap of Rs 5,000 or Rs 6,000 as the maximum monthly pension. In 1996, an additional provision was added to para 11(3) of EPS-95 which provided employers and employees with the option to contribute higher amounts than this limit through filing joint option forms over a six month period.

In 2014, the government amended EPS-95 and increased the maximum pensionable salary from Rs 5000/6000 thousand to Rs 15000 while also removing para 11(3)’s provision for higher salaries contributions towards EPS.

The government amended the EPS-95 scheme on September 1, 2014 to increase the maximum pensionable salary to Rs.15,000 and remove the provision that allowed employers and employees to contribute EPS on a higher salary amount.

As a result, employers are now required to make an EPS contribution of 8.33% of their employees’ salaries up to a maximum of Rs. 15,000 even if they draw a higher salary than this amount.

However, those who were part of EPS-95 or joined before September 1, 2014 can still contribute 8.33% on their actual salary rather than the cap if they submit a new joint option with the EPFO before February 28, 2015.

Higher pension contribution under EPS

After the 2014 amendment, there were issues concerning pension contributions on higher salaries. Many employees were unaware of the option to contribute pension on a higher salary amount, and their joint options were rejected by the EPFO. Employers still contributed 8.33% of pension on employees’ actual salaries without filing these joint options, but for pension calculations, the salary was capped at Rs.15,000.

In response to this situation, many employees filed cases in High Courts to receive pensions based on contributions made for their actual salaries amounts. The Supreme Court then took up this matter and issued a decision;

A summary is provided below:

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 within four months of the judgement date, i.e. within 03/03/2023
Employees retired before 01/09/2014	Exercised joint option and rejected by the EPFO	Yes	By filing a joint option and higher pension claim application
Employees retired before 01/09/2014	Not exercised joint option	No	Not applicable

The Supreme Court ruled that employees who were part of the EPF before September 1, 2014 but had not exercised the joint option could do so by March 3, 2023.

For example:

Mr. ‘X’ joined the EPF in 1998 and his salary increased to Rs.50,000 in 2015. His employer contributed Rs.6,000 (12% of his basic wage) towards EPF; however, only Rs.1,250 (8.33% of a statutory wage cap of Rs.15,000) went to the EPS and the remaining Rs.4,750 went to the EPF account instead due to this cap limit being lower than Mr X’s actual salary amount (Rs 50k).

By exercising his joint option within 03/03/2023 as per Supreme Court judgement since EPS contribution was above statutory wage cap of Rs 15000 , Mr X’s employer will contribute Rs 4165 (8.33% of his actual salary) and 1835 (6000 minus 4165) towards EPF respectively; The EPFO will calculate monthly EPS amount based on 8.33% contribution on actual salary and transfer difference amount from PF account to EPS account; This difference will be calculated from either employee joining date or November 1 1995 whichever is later – However this higher pension contribution would reduce lumpsum corpus that employee gets upon retirement.

EPF higher pension eligibility

In December 2022, the Employees’ Provident Fund Organisation (EPFO) issued a directive outlining the requirements and procedures to be followed for claiming an increased pension. To be eligible for such a pension, the employee must have retired prior to 01/09/2014, selected joint option under Para 11(3) of EPS-95 while being a part of EPF-95 and both employee and employer having contributed EPS on salary exceeding Rs.5,000 or Rs.6,500 respectively.

The EPFO denied the opportunity to exercise the option of a higher pension for those who were previously part of the EPF before 01/09/2014 yet still employed or retired thereafter. In accordance with the Supreme Court ruling, these individuals were entitled to a more generous pension. As a result, in February, another circular was issued by the EPFO that provided criteria for claiming an augmented pension. The conditions necessary to get a joint allowance for increased retirement benefits are as follows:

The EPFO denied the opportunity to exercise the option of a higher pension for those who were previously part of the EPF before 01/09/2014 yet still employed or retired thereafter. In accordance with the Supreme Court ruling, these individuals were entitled to a more generous pension. As a result, in February, another circular was issued by the EPFO that provided criteria for claiming an augmented pension. The conditions necessary to get a joint allowance for increased retirement benefits are as follows:

Employees who had joined the EPS-95 and utilized the shared choices under the removed para 11(3) of the EPS however didn’t record new joint options after the amendment of 2014 are ineligible to demand a more prominent pension. The EPS commitments of such workers will be 8.33% on the most extreme sum Rs.15,000, paying little heed to their real wages.

How to apply for a higher pension in EPF?

The process to claim a higher pension amount/contribution is as follows:

1. Employees must submit the joint option/higher pension claim application specified by the Regional Provident Fund Commissioner (RPFC). An online URL will be provided for this purpose.
2. The EPFO will digitally register each application and provide the applicant with a receipt number.
3. The EPFO will then forward these applications to their respective employers who must verify them using e-sign/digital signature for further processing.
4. Finally, the RPFC will convert all applications into e-files.
5. The Dealing Assistant will examine the documents and forward the case to the Section Account Officer/Supervisor.
6. The Account Officer/Supervisor will review and identify any discrepancies before sending them to the Assistant Provident Fund Commissioners (APFC)/RPFC-II for further examination.
7. Finally, the APFC/RPFC-II will decide on a higher pension amount and notify applicants via email, post, phone or SMS.

EPF higher pension option form

Eligible employees who retired before 2014 and those who joined EPS-95 but are retired/working after 2014 can apply for a higher pension claim with the EPFO.

For those who retired before 2014, they may submit their application online or to the regional EPF offices.

Those who joined EPS-95 and are either retired or still working after 2014 have until 03/03/2023 to apply using the joint option form online or at the concerned regional EPF offices in order to receive a higher pension.

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EPFO guidelines for higher pension

The joint option/higher pension claim application must include a disclaimer or declaration, as well as the employee’s explicit consent for any share adjustment from PF to EPS and re-deposit of the amount. Additionally, an undertaking must be provided by the trustee in order to transfer funds from exempted PF trust to the EPFO pension fund, with due contribution and interest being deposited within the specified time.

When submitting a higher pension claim application, proof of joint option verified by the employer filed under para 26(6) of the EPF scheme and proof of remittance of EPS contribution in the PF account exceeding either Rs.6,500 or Rs.5,000 should be included. Written refusal from APFC or EPFO regarding such remittance or request is also necessary.

For a joint option application submission instead, proof of remittance of EPS contribution in excess of either Rs.6,500 or Rs.5,000 needs to be provided along with proof verified by employer filed under para 26(6) of EPF Scheme 1952 for unexempted establishments’ employees refund contributions share deposit with interest rate declared under para 60 . The EPFO will issue further circulars regarding deposit method and pension computation after this point too.

Finally, if an employee faces any grievance when attempting to get a higher pension after submitting their application and making payment (if due), they can raise a complaint on EPFiGMS.

EPF higher pension calculation formula

The EPS pension formula is:

Monthly pension amount = (Pensionable salary X pensionable service)/70

Where pensionable salary is the average of the last 60 months’ salary, and pensionable service is the number of years contributions were made to the EPS account.

For employees who superannuate at 58 years with a pensionable service period of more than 20 years, a weightage of 2 years will be added to their service period. However, this maximum pensionable service cannot exceed 35 years.

EPF higher pension calculation 

Let’s look at how the monthly pension amount is calculated for Mr. X who exercised the joint option to receive a higher pension:

• His average monthly salary over the last five years has been Rs.50,000
• He has rendered services for 25 years
• He superannuated at 58 years
• Therefore, as per the pension calculation formula, his monthly pension amount will be Rs.19,285 [i.e., 50000 x 27 (25+2)]/70]

Frequently Asked Questions