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Pension Scheme 1955

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25 views8 pages

Pension Scheme 1955

Uploaded by

Pallavi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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PENSION SCHEME,1955

R C Gupta v Regional Provident Fund Commissioner (2016)

Facts

The case involves employees who challenged the ceiling limit on pensionable salary under the
Employees' Pension Scheme.
The Pension Scheme, introduced in 1995, initially had a maximum pensionable salary limit of
Rs. 5,000, later increased to Rs. 6,500.
A proviso was added in 1996 allowing employers and employees to contribute on the full
salary exceeding the ceiling limit.
The appellant-employees, near retirement in 2005, requested to be given the benefit of this
proviso, claiming they were unaware of it earlier.
The Provident Fund Authority rejected their request, citing a cut-off date for exercising this
option.
R C Gupta v Regional Provident Fund Commissioner (2016)

Issues

Is there a strict cut-off date for exercising the option under Clause 11(3) of the Pension
Scheme?
Does exercising an option under the Provident Fund Scheme preclude eligibility for the
Pension Scheme option?
Are employees entitled to pension based on their actual salary when contributions were
made on the full amount?
How should courts interpret beneficial social security schemes, particularly regarding
procedural aspects?
R C Gupta v Regional Provident Fund Commissioner (2016)

Judgement

It interpreted Clause 11(3) of the Pension Scheme, finding that the dates mentioned were not
strict cut-off dates for exercising the option.
The Court held that employees could opt for pension contributions based on their actual salary,
even after the initial option period had passed.
It emphasized that beneficial schemes should not be defeated by rigid adherence to cut-off dates.
The Court noted that employers had been depositing 12% of the actual salary, not just the
capped amount, which supported the employees' case.
It rejected the argument that exercising an option under paragraph 26(6) of the Provident
Fund Scheme precluded exercising a similar option under the Pension Scheme.
The Court allowed employees to opt for higher pension contributions retrospectively.
EPFO and Anr v/s Sunil Kumar B

Facts

The case involves Amendments made to the Pension Scheme of 1955 by the Central Government in
2014.
The 2014 amendments brought a slew of changes: raising the wage ceiling, changing the
method of calculating pensionable salary, new contribution requirements
These amendments were challenged in Courts across thr country by the employees and their
unions.
The Kerela High Court delivered a judgement in 2018 striking down the 2014 amendments as
invalid,arbitrary and ultra vires the EPF Act 1952 .
It was appealed against in the Supreme Court by the Govt of India and EFPO.
EPFO and Anr v/s Sunil Kumar B

Issues

Does the Govt. have the requisite authority to amend the Scheme ?
Are the provisions requiring employee contribution for higher pension tenable in the eyes
of law?
Are employees entitled to pension based on their actual salary when contributions were
made on the full amount?
How should courts interpret beneficial social security schemes, particularly regarding
procedural aspects?
EPFO and Anr v/s Sunil Kumar B

Judgement

The Court upheld the authority of the Govt. to make amendments deriving power from Sec 7 of
EPF.
The Court held that beneficial schemes like EPS could not be curtailed by a cut off date.
The provision of additional contribution by the Employees was hel to be ultra vires the act as the
original Act had no contemplation for such a provision.
The Court held that there was no flaw in the methodology adopted to determine the Pensionable
salary.
It emphasized that beneficial schemes should not be defeated by rigid adherence to cut-off dates.
New Pension Scheme 2004

It was introduced by the Govt. of India in 2004 , applicable to all Central Government Employees.
It was based on a Defined Contribution model - follows a Two-tier system.
Tier 1 : Employees contribute 10% of Basic pay , DA ; Govt makes an equal matching contribution
Regulated by the Pension Fund Regulatory and Development Authority.
At the time of exit from the Scheme ( normal 60 years ) : mandatory use of 40% pension wealth ti
buy annuity for a lifetime pension
Rest 60% can be withdrawn as a lump sum.
It was modified in 2019 - Govt now contributing up to 14%.ions retrospectively.

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