Higher pension: Why employees feel the EPS math doesn't add up

Those opting for a higher payout are struggling with delays, rejections and lower-than-expected pensions

- Aprajita Sharma

Opting for a higher pension under Employees' Pension Scheme (EPS) seems to have become a procedural nightmare for employees. Some people who applied for it after the Supreme Court order of November 2022 are still waiting for the Employees' Provident Fund Organisation (EPFO) to accept their applications. Though, according to a 26 February statement, EPFO aims to process all applications by 31 March 2025, employees continue to question the methodology for calculating monthly pension.

Almost a decade-old confusion In August 2014, the central government amended the Employees' Pension Scheme, 1995, raising the pensionable salary cap from ₹6,500 to ₹15,000 a month and restricting EPS membership to those with earnings of ₹15,000 or less at joining. Existing members contributing on salaries of above ₹15,000 had to submit a fresh option with the employer to contribute on salaries exceeding ₹15,000. They also had to pay an additional 1.16% on the excess salary. Pension was to be based on the average monthly salary of the last 60 months before exiting EPS. The changes took effect on 1 September 2014.

The Kerala, Rajasthan, and Delhi high courts struck down the amendment, but the Supreme Court upheld it with riders. It allowed EPF members as of 31 August 2014 or retirees before that date to contribute 8.33% of their basic pay to EPS for a higher pension. Employees and employers contribute 12% of salary (basic plus dearness allowance) to EPF. The employee's share goes fully to EPF, while the employer's share is split—3.67% to EPF and 8.33% to EPS. The court removed the 1.16% additional contribution requirement but mandated employees opting for a higher pension to pay balance contributions based on their actual basic pay for past service.