EPFO blocks Gupta’s pension over observation of the SC’s judgment - Karma Global
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EPFO blocks Gupta’s pension over observation of the SC’s judgment of 4th November, likely to move the Court again!


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EPFO blocks Gupta’s pension over observation of the SC’s judgment of 4th November, likely to move the Court again!
Let us look at the 4 things before coming to Gupta’s matter.

(1) Why did the employees litigate?

An option to increase pension is provided for in EPS-1995, for which 8.33% of the employer’s contribution to the employee’s PF account must be remitted into the pension fund on actual basic pay, dearness allowance, and retaining allowance.

The request for a higher pension should be made in the form of an option exercised by both employee and employer.

But due to information asymmetry, most members did not exercise this option and have been contributing to the pension fund only within a salary cap (which was revised from ₹6,500 to ₹15,000 eight years ago), and not on actual pay. This reduced the pension benefit sharply.

The litigation by employees arose because the Union Government amended EPS-1995 effective September 1, 2014, introducing, among other changes, a time limit of six months for the members, jointly with their employers, to opt for a higher pension based on their actual salary, and a further six months where the reasonable cause for delay existed. The time limit was, however, not known to the employees as there was no communication to them; subsequent applications for higher pension were rejected by the EPFO citing the cut-off date, even after it had been set aside by a two-judge bench of the SC in the precedent-setting R.C. Gupta case in 2016.


(2) What is the impact of the order?

The Supreme Court importantly upheld the amendments to the pension scheme made by the government in 2014, which restricts even membership of the scheme up to a wage ceiling of ₹15,000. But it provided some relief to employees.

The SC bench directed that members of the scheme who did not exercise the option for higher pension as provided for in the scheme as it existed before the 2014 amendment, were entitled to exercise the option, jointly with their employers, even under the amended scheme. This right was upheld in the R.C. Gupta judgment, which said no cut-off date was envisaged in EPS-1995.

The court said that all employees who did not exercise the option but were entitled to do so due to the interpretation of the cut-off date by authorities should get a further four months to do so from the date of the order.

The implication is that those who were members of EPS-1995 as of September 1, 2014, and beyond could exercise the joint option. This means that serving employees can opt for higher pensions now, transferring the stipulated part of the employer’s contribution to the pension fund.

Other members who contributed to the fund beyond that date but retired, would have to remit the stipulated dues into the pension fund of the EPFO.

Yet, the court specifically excluded those who retired prior to September 1, 2014, without exercising the joint option in the unamended scheme, since they had already exited the membership. This part of the order covers older employees who get a meager pension. They cite a lack of communication on the option of a higher pension while in service.


(3) How has the court responded to the government’s demands?

While the court granted partial relief to the employees, it also gave some consideration to the Union government’s argument that it would be stretched for funds to pay higher pensions.

The members opting for higher pension would, therefore, have to contribute an additional 1.16% on salary exceeding ₹15,000 as a temporary measure for six months, while the government came up with measures to augment its resources. This includes the possibility of legislatively raising the employer’s rate of contribution. At the same time, the judges held the government’s demand for the 1.16% employee contribution was not sustainable by law. The compromise was thus only to advance the rollout of the higher pension.

The apex court recognized the government’s powers to amend the pension scheme prospectively or retrospectively under Section 7 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. Based on this recognition, the judges did not interfere with the revised formula used to calculate the quantum of pension — the employees had challenged the reckoning of pensionable wages spread over 60 months of service before the employee exited, rather than 12 months of service that existed in the pre-2014 scheme. The Union government used the example of manual labourers to claim that wages could vary widely, and even be low in the final 12 months. Ironically, the case pertained to organized sector employees whose wages are highest in the last year of service.


(4) What did the court say about employees of exempted establishments?

The bench of Chief Justice of India U.U. Lalit, Aniruddha Bose, and Sudhanshu Dhulia directed that the amended scheme of 2014 would apply to employees of exempted establishments, which are those allowed by law to maintain their contributions in Provident Fund Trusts, rather than with the PF authorities. They must, however, now give an undertaking along with the joint option, to transfer the stipulated employer’s contribution, matching the quantum that would have been due for transfer for accounts maintained by PF authorities.


R C Gupta’s issue in a bid to re-open the can of worms:

The legal battle of retired staff with the Employees’ Provident Fund Organization (EPFO) for the higher scale PF (provident fund) pensions is yet to be over even after a Supreme Court judgment in 2016.

In the latest development, R C Gupta, the man who had won the case which ensured a higher pension for a large number of people, has announced that he will move the court again as the EPFO has blocked his pension.

However, EPFO has now blocked Gupta’s pension citing an observation of the Supreme Court in a judgment delivered on November 4 last year.

While validating its judgment in the Gupta case, the apex court said that employees who had retired from service before September 1, 2014, could not give fresh options.

Gupta retired as general manager with Himachal Pradesh Tourism Development Corporation (HPTDC) in 2008 and gave options in 2016 based on the Supreme Court Judgement.  EPFO has now stopped his pension pointing out that the option was given after September 2014.


Gupta’s version

Meanwhile, Gupta said that he would be filing two cases against the EPFO. One relates to blocking his pension without serving a notice and providing him an opportunity to explain his view.  The second case is a defamation case.

“From the time I joined it, the organization I worked for had contributed to EPFO proportional to my salary.  In fact, under para 26(6) the option for pension should be given at the time of joining the service.

Based on this option, a higher amount was paid as a PF contribution.  Asking an employee to submit his option online again years after retirement is a big joke, such a directive of the EPFO is also improper and undemocratic, said Gupta.



  • Higher pensions may provide a sense of economic security after retirement. But the amount that a pensioner gets during his/her lifetime will get halved on his/her death and paid to the spouse.
  • However, the amount that is lying in an employee’s PF account will be paid totally to the employee’s spouse in the event of his/her death during service.


  • While there may be a financial impact, the move is likely to provide some relief to subscribers who are eligible for higher pensions under the EPS.


Karma Global is a fully homegrown successful Outsourcing and Labour Laws Organization, operating both with contract employees as well as with permanent types of employees who are placed in numerous locations of global and domestic clients.

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Proprietary blog of Karma Global Tech Management LLC

This blog has been collated and compiled by the internal staff of Karma Global with the knowledge and expertise that they possess, besides adaptation, illustration, derivation, transformation, and collection from various sources, for its monthly newsletter Issue 10 of April   2023 and in case of specific or general information or compliance updates for that matter, kindly reach out to the Marketing Team – Kush@karmamgmt.com / yashika@karmamgmt.com

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