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EMPLOYEE'S PENSION (AMENDMENT) SCHEME, 2014 QUASHED BY SUPREME COURT: A Major Relief To The Employees

Team SoOLEGAL 2 Apr 2019 10:13am

EMPLOYEE'S PENSION (AMENDMENT) SCHEME, 2014 QUASHED BY SUPREME COURT: A Major Relief To The Employees

Kerala High Court had allowed writ petitions which were filed by the employees of different establishments covered by the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. These writ petitions related to reduction of pension due to the Employees' Pension (Amendment) Scheme, 2014.

Division bench comprising of Justice Surendra Mohan and Justice AM Babu had observed:

"The employees, who have been making contributions on the basis of their actual salaries after submitting a joint option with their employers as required by the Pension Scheme, are denied the benefits of their contributions by the said amendments without any justification. Apart from the above, to cap the salary at Rs. 15,000/- for quantifying pension is absolutely unrealistic. A monthly salary of Rs.15,000/- works out only to about Rs.500/- per day. It is common knowledge that, even a manual labourer is paid more than the said amounts as daily wages. Therefore, to limit the maximum salary at Rs.15,000/- for pension would deprive most of the employees of a decent pension in their old age. Since the pension scheme is intended to provide succour to the retired employees, the said object would be defeated by capping the salary." 
The following changes were bought by the amendment:

1. The pension to be determined on pro-rata basis for pensionable service up to 1st of September, 2014 at the maximum pensionable salary of Rs.6,500 and for the period thereafter at the maximum pensionable salary of Rs.15,000 per month. 
2.Maximum pensionable salary limited to Rs.15,000 per month.

3. The e3xisting members can submit a fresh fresh option jointly with their employer to continue to contribute on salary exceeding Rs.15,000 per month. The employee will have to further contribute at the rate of 1.16% on the salary exceeding Rs.15,000/-, additionally.

4. There is withdrawal of benefits where a member has not rendered the eligible service as required. 
Provides for withdrawal of the benefits where a member has not rendered the eligible service as required. 

Contention of the Employees Provident Fund Organization was paying the pension which is computed on the basis of their actual salaries by the employees tends to deplete the Pension Fund, thereby making the Scheme unworkable. This contention was rejected by the High Court bench comprising the CJI Ranjan Gogoi, Justice Deepak Gupta and Justice Sanjiv Khanna. It was found that the provision capping the maximum pensionable salary at Rs.15,000/- disentitling the persons who have contributed on the basis of their actual salaries to any benefits on the basis of the excess contributions made by them, is arbitrary and unsustainable.
The bench dismissed the SLP filed by Employees Provident Fund Organization observing that it does not find any merit in it. 
This is a major relief for the employees as Supreme Court has dismissed the Special Leave Petition filed against a Kerala High Court Judgment and set aside Employee's Pension (Amendment) Scheme, 2014 that capped maximum pensionable salary to Rs.15, 000 per month. 



Tagged: Employee's Pension (Amendment) Scheme 2014   Supreme Court   Justice Deepak Gupta   Justice Sanjiv Khanna   CJI Ranjan Gogoi  
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