EPFO Issues Directions To Calculate Higher Pension With Interest

The Employees’ Provident Fund Organisation (EPFO) has issued a new circular directing its regional offices on the method to calculate the dues of subscribers who apply for higher PF pensions.

Reiterating the applicable provisions, the notification makes it clear that in respect of members who have exercised a 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 shall be nine and forty-ninth per cent. (9.49%) of the basic wages, dearness allowance and retaining allowance of each member by increasing one and sixteenth per cent. (1.16%) from the extant eight and one-third per cent. (8.33%); and

(i) the increased contribution shall be applicable to basic wages, dearness allowance and retaining allowance to the extent such basic wages, dearness allowance and retaining allowance exceed fifteen thousand rupees per month."

To give effect to the above there will be a need to undertake the following:

In all eligible cases of Joint Options, there will be a requirement for accounting 1.16% additional contribution on the pay above Rs. 15,000/- p.m. of the employer share to the Pension Fund. Similarly, in eligible cases of Applications/Joint Options, where past remittances on higher pay were made in the Provident Fund but not in the Pension Fund, adjustments will be required for an 8.33% contribution from the employer's share.

In case of acceptance of the joint option of members who are still in service and OIC has passed the requisite speaking order, the present employer shall continue to pay pension contribution on higher wages in future also including the increased 1.15% on wages above Rs. 15000/- per month.

Calculation of Dues  

Besides the procedural aspects mentioned in the circular, dues should be calculated month-wise in the following manner:

1. 8.33% of the employer's share on higher pay (w.e.f.16.11.1995 or the date the pay exceeds the wage ceiling; whichever is later) will be calculated as per records. 

2. 1.16% of employer share on higher pay above Rs. 15,000/- PM.

3. The interest to be charged on dues and shall be the interest earned by the members on their PF accumulations.

4. The provisions to apply retrospectively.