As per the norms of higher EPFO pension, an additional 1.16% will be deducted from the employer’s contribution within the overall 12% total contribution to the provident fund. Thus, if a member is seeking high pension benefits and is found eligible to get so, the employer’s contribution towards PF would be 9.39% instead of 8.33%.
Additional 1.16% to Be Taken From Employer Under EPFO Higher Pension Scheme
This change was notified by the Ministry of Labour and Employment, which will be in effect from September 1, 2014, complying with the ruling of the Supreme Court.
“The spirit of the EPF & MP Act as well as the Code on Social Security, 2020 do not envisage contribution from the employees into the pension fund. Accordingly, keeping in mind the letter and spirit of the EPF & MP Act and the Code, it has been decided to draw 1.16 % additional contribution from within the overall 12% of the contribution of the employers into the provident fund,” reads the statement from Ministry.
“The Supreme Court, in its November 2022 ruling, held the requirement of the members to contribute at the rate of 1.16% of their salary to the extent it exceeds the cap of Rs 15,000 per month as an additional contribution to be ultra vires of the provisions of the Employees’ Provident Fund and Miscellaneous Provisions Act,1952 (EPF & MP Act) and had directed the authorities to make necessary adjustments in the scheme within a period of six months,” mentioned by financial express.
“With the issue of above notifications, all the directions of the Supreme Court contained in the judgment dated November 4, 2022, have been complied with,” the ministry further informed.
“The amount equal to 1.16% was earlier being paid by employees which was not approved by the apex court. Now, the same amount to be paid out of 12% of the employer’s share will reduce the employee’s kitty in his provident fund. The net financial effect to the employee remains the same,” said Parveen Kohli, a Pension Activist.