{"id":276822,"date":"2022-11-05T14:00:05","date_gmt":"2022-11-05T08:30:05","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=276822"},"modified":"2022-11-05T14:00:05","modified_gmt":"2022-11-05T08:30:05","slug":"amended-employees-pension-scheme-valid-provisions-read-down-applicability-explained-1-6-contribution-illegal-supreme-court-legal-research-service-law-updates-news","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2022\/11\/05\/amended-employees-pension-scheme-valid-provisions-read-down-applicability-explained-1-6-contribution-illegal-supreme-court-legal-research-service-law-updates-news\/","title":{"rendered":"Supreme Court upholds validity of amended Employees\u2019 Pension Scheme but reads down certain provisions; Explains applicability of pre & post amendment Scheme"},"content":{"rendered":"

Supreme Court<\/strong>: The 3-judge bench of UU Lalit, CJ and Aniruddha Bose<\/strong>* and Sudhanshu Dhulia, JJ has upheld the legality of certain amendments and modifications to the Employees\u2019 Pension Scheme, 1995 (1995 Scheme) but has read down certain provisions of the Scheme.<\/p>\n

A brief overview of the Scheme<\/strong><\/span><\/h4>\n

The Scheme in question was made in pursuance of, inter-alia, Section 6-A<\/a> of the Employees\u2019 Provident Funds and Miscellaneous Provisions Act, 1952<\/a>, which was introduced in 1995.<\/p>\n

The 1995 Amendment contemplated formulation of a scheme for employees\u2019 pension and the pension fund was to comprise of deposit of 8.33 % of the employers\u2019 contribution made towards provident fund corpus as per the prevailing Statue. It also dealt with determination of pensionable salary.<\/p>\n

At that point of time, maximum pensionable salary was Rs.5000\/-\u00a0 and this sum had been enhanced subsequently to Rs.6500\/-. Pensionable salary was raised to Rs.15000\/- by a notification dated 22.08.2014, which was to be effective from 01.09.2014. This notification brought certain other modifications in the scheme mainly restricting its coverage.<\/p>\n

As per paragraph 3(ii) of the pension scheme, the Central Government was to contribute to the fund at the rate of 1.16 % of the pay of the members. Employees within the changed pension regime drawing more than Rs.15000\/- per month have to also contribute at the rate of 1.16 % on salary\u00a0\u00a0 exceeding Rs.15000\/- as additional contribution each month under the amended provisions.<\/p>\n

Further, fresh option was to be exercised by the member within a period of six months from the 1st day of September 2014, which was extendable up to about 6 months on sufficient cause shown by the member.<\/p>\n

The fourth proviso to sub-clause (4) of paragraph 11 specifies that if no option is exercised by a member within the aforesaid period, it would be deemed that the concerned member has not opted for contribution over the wage ceiling. In such a case, the contributions to the pension fund made beyond the wage limit in respect of such a member is to be diverted to the provident fund account of the member along with interest, as declared under the provident fund scheme from time to time.<\/p>\n

Challenge to the scheme <\/strong><\/span><\/h4>\n

44 writ petitions were filed in\u00a0different writ\u00a0petitions\u00a0in\u00a0different\u00a0High\u00a0Courts seeking invalidation of this notification on the ground that a set of employees had approached the provident fund authorities much beyond such perceived specified date, mostly on the eve of their retirement, seeking to be included in the pension scheme.<\/p>\n

Supreme Court\u2019s findings<\/strong><\/span><\/h4>\n