Pension on Higher Wages under EPS: Everything You Need to Know

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Pension on Higher Wages under EPS: Everything You Need to Know

📌 Introduction

Employees' Pension Scheme (EPS), 1995, administered by the EPFO, aims to provide pension benefits to employees in the organized sector. Normally, pension is calculated on a wage ceiling (₹15,000 as of now). However, employees can opt for pension on higher wages, which means pension will be calculated on actual salary (if more than ₹15,000), potentially leading to higher monthly pensions post-retirement.

⚖️ Legal Foundation & Recent Developments

👉 The Basic Rule:

  • As per Para 11(3) of EPS, 1995, pensionable salary is capped at ₹15,000/month (earlier ₹6,500).
  • However, Para 11(4) allowed employees and employers to jointly opt for pension on actual salary by contributing 8.33% of the full salary, not just the capped amount.


🔍 Supreme Court Judgments:

  1. RC Gupta Case (2016) – Allowed belated option for higher pension if contribution was already made on full salary.
  1. EPFO v. Sunil Kumar & Others (2022) – Landmark verdict upholding employees’ right to opt for pension on higher wages, subject to specific conditions.
  2. Latest 2023 Guidelines – EPFO issued circulars for eligible employees (as on 01.09.2014) to apply for higher pension with deadline extensions.

👥 Eligibility Criteria for Higher Pension

You are eligible if:

  • You were a member of EPS before 01.09.2014.
  • Your employer contributed 8.33% on your full wages (beyond the ₹6,500/₹15,000 limit).
  • You did not exercise the joint option earlier but have proof of full salary contribution.

📝 Application Process for Higher Pension

  1. Login to EPFO Unified Portal: https://unifiedportal-mem.epfindia.gov.in/
  2. Click on “Pension on Higher Salary”.
  3. Fill the joint option form with employer certification.
  4. Submit necessary salary proof and contribution records.
  5. Track application status online.

📈 Pension Calculation Formula

Monthly Pension = (Pensionable Salary × Pensionable Service) / 70

  • Pensionable Salary: Average of last 60 months' actual salary.
  • Pensionable Service: Total years of contribution (max 35 years).

Example:
If salary = ₹50,000 & service = 30 years
👉 Pension = (50,000 × 30) / 70 = ₹21,428/month

⏳ Deadline Alert

EPFO has set time-bound windows for exercising the joint option. Keep an eye on EPFO notifications. Late submissions may be rejected unless allowed by further orders or extensions.

⚠️ Important Points

  • Higher contribution = more pension, but no refund.
  • Transfer from EPF to EPS may reduce EPF balance.
  • Employer’s support is essential for verification.
  • Legal challenges are still ongoing in some cases.

📚 Conclusion

Choosing higher pension under EPS can be a valuable retirement strategy, especially for long-serving high-salary employees. However, it requires careful evaluation of documents, contribution history, and employer coordination. Always consult a professional or visit the EPFO office for personalized guidance.

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