EPF Pension Case : Why Annual Reports Don't Reflect Potential Financial Burden? Supreme Court Asks Union, EPFO [Day 6 Hearing]

On the final day of hearing the EPF Pension case, the Supreme Court on Thursday asked the Union of India why the annual reports did not reflect the potential financial burden that would befall the government if pensioners are allowed to opt for the Pension Scheme retrospectively and beyond the Rs 15,000 wage limit. A bench of Justices UU Lalit, Sudhanshu Dhulia and Aniruddha Bose posed the question while hearing a batch of appeals moved by the Employee Provident Fund Organisation challenging the Kerala, Rajasthan and Delhi High Court judgements quashing the Employee Pension (Amendment) Scheme, 2014. In 2018, the Kerala High Court, while setting aside the Employee's Pension (Amendment) Scheme, 2014 [2014 Amendment Scheme], allowed paying pension in proportion to the salary above the threshold limit of Rs 15,000 per month. On February 25, 2021, the division bench of Justice UU Lalit and Justice KM Joseph restrained the High Court of Kerala, Delhi and Rajasthan from initiating contempt proceedings against the Central Government and the EPFO over the non-implementation of the HC verdicts. In August 2021, a 2-judge bench of the Supreme Court had referred the appeals to a 3-judge bench to consider the following issues: Whether there would be a cut-off date under paragraph 11(3) of the Employees' Pension Scheme andWhether the decision in R.C. Gupta v. Regional Provident Fund Commissioner (2016) would be the governing principle on the basis of which all these matters must be disposed. Here's what happened during the hearing yesterday: Implementing HC judgement would mean paying every private sector employee beyond the ceiling During the hearing, Senior Advocate Aryama Sundaram appearing for the EPFO apprised the bench that the pertinent questions in the matter is: "Whether the persons contributing to the PF scheme would ipso facto be members of the pension scheme." "This is for people above the statutory limit?", Justice UU Lalit asked. "Milord, nothing has changed for people below the statutory limit except the statutory limit has changed from Rs 6,500 to 15,000", the senior advocate clarified. The other questions which consideration would include: Whether such people would be allowed to retrospectively contribute and would they be put on par with those who had opted and contributed to the pension scheme as on date of the 2014 Amendment. Whether permitting such retrospective contribution to the provident fund would be merely a book adjustment as suggested in RC Gupta or would it have serious financial ramifications. "I personally believe, this is the hub. All that's going to happen is that the government has to bear an extra 5000 crores, 10,000 crores. Why not give these people the benefit? It will definitely have a bearing on the provisions. RC Gupta is saying, if it's merely book adjustment, in which case a beneficial view should be taken in the matter. Or, is that wrong, in which case a stricter interpretation ought to be given. This would be my submission, milords", Sundaram told the Court. Answering the abovementioned questions, Sundaram submitted that there are people who contribute large sums of money to the PF scheme, on a monthly basis. Sundaram said the implementing the Kerala High Court judgment would essentially mean that every private sector employee should be paid a pension irrespective of his salary limit. Every private sector employee would opt for pension and claim it based on the last drawn salary that yields 50% of the pensionable salary, despite the fact that he did not contribute to the fund. "There are people who are contributing 12 Lakhs per month to the PF scheme. Just imagine the salary, milords. Those persons will now also come into this bracket." "You can learn from your mistakes. Just like you have a minimum level, you can have a maximum level as a ceiling", the bench commented. "There is a maximum level", Sundaram said. The level of contribution, the court explained. "Isn't this an isolated case?", was the bench's next question. "In this scheme, the fight is not between the government and its employees. They are covered. This is actually for the private sector." "Yes, we understood", said the Bench. "That's why the idea was there must be protection even for the private sector", Justice Lalit averred. Net effect is financial burden for the State government During the earlier hearings, the pensioners had pointed out that the pension is being paid out of the interest accrued on the Provident Fund and that the Corpus remains untouched. therefore, there's no question of financial burden for the Centre. Countering this, Sundaram argued, "What is the net effect – because the other side said that the monetary effect is nothing at all. 21,229 people actually didn't pay. How does it affect financially? I can't do anything...

EPF Pension Case : Why Annual Reports Don't Reflect Potential Financial Burden? Supreme Court Asks Union, EPFO [Day 6 Hearing]

Rintu Mariam Biju

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