EPFO seeks Pension Scheme compliance where salary exceeds 15k pm from 1 Sept. 2014

EPFO asks for Employee Contribution of 1.16% towards pension fund in cases of salary exceeding Rs. 15000 per month w.e.f. 1 Sept. 2014; also seeks option letter both from Employer and Employee for compliance

EPFO has observed that 1.16% of salary exceeding Rs.15000, as an additional contribution to the pension fund, is not being made by the establishments in respect of concerned employees in more than 90% of the cases in violation of the provisions of Pension Scheme. Therefore the EPFO seeks to examine all such cases for compliance of additional contribution of 1.16% and submission of fresh option, both by the employer as well as the employee, for contribution on salary exceeding Rs.15000 per month, as per requirements of provisions of Para 11(4) of the EPS 1995.

The provisions of Para 11(4) of Employees Pension Scheme 1995 (determination of pensionable salary) as per EPFO Notification dt. 22 Aug. 2014 are as under:

The existing members as on the 1st day of September, 2014, who at the option of the employer and employee, had been contributing on salary exceeding six thousand and five hundred rupees per month, may on a fresh option to be exercised jointly by the employer and employee continue to contribute on salary exceeding fifteen thousand rupees per month.

Provided that the aforesaid members have to contribute at the rate of 1.16 per cent or salary exceeding fifteen thousand rupees as an additional contribution from and out of the contributions payable by the employees for each month under the provisions of the Act on the rules made there under. 

Provided further that the fresh option shall be exercised by the member within a period of six months from the 1st day of September, 2014. 

Provided also that the period specified in the second proviso may, on sufficient cause being shown by the member, be extended by the Regional Provident Fund Commissioner for a further period not exceeding six months: 

Provided also that if no option is exercised by the member within such period (including the extended period), it shall be deemed that the member has not opted for contribution over wage ceiling and the contributions to the Pension fund made over the wage ceiling in respect of the member shall be diverted to the Provident Fund account of the member along with interest as declared under the Employees’ Provident Fund Scheme from time to time.”

However, it is observed in EPFO Report that 1.16% of salary exceeding Rs.15000 as an additional contribution to the pension fund is not being made by the establishments in respect of concerned employees in more than 90% of the cases selected in its sample (i.e. April and May 2016).

Therefore the EPFO has advised all RO/SROs to examine each case of contribution on salary exceeding Rs. 15,000 per month for compliance of the above stated provisions of the Pension Scheme, both in respect of additional contribution of 1.16% and also regarding submission of fresh option for contribution on salary exceeding Rs.15000 per month as per requirements of provisions of Para 11(4) of the EPS 1995.

To view or download pdf copy of the letter containing EPFO’s instructions, please refer the link below:

EPFO seeks compliance of Pension Scheme from 1 Sept. 2014 where salary exceeds Rs. 15000 pm

Leave a Reply