Employees’ Provident Fund Organisation (EPFO) issued clarifications regarding the processing of pension on higher wages (PoHW) cases, addressing key issues raised by its field offices. These clarifications, approved by the Ministry of Labour & Employment (MoL&E), cover four main areas.
First, pension computation on a pro-rata basis aligns with Para 12 of the Employees’ Pension Scheme (EPS) and treats pensioners under wage ceiling and higher wages equally, with the Hon’ble Supreme Court affirming its validity. Second, eligibility for PoHW in exempted establishments must adhere to trust rules, as clarified in the Sunil Kumar case. Applications from such trusts cannot be considered if rules were amended after the Supreme Court’s decision on November 4, 2022.
Third, PoHW dues must be fully paid into the pension fund before eligibility is finalized. Offsetting dues against pension arrears is discouraged, as it complicates tax deduction at source (TDS) and pensioner taxation. Lastly, arrears from retrospective wage revisions should not incur damages under Section 14-B, provided they were not due to deliberate employer default. However, interest on such dues may be recovered until the retirement or cessation of membership in EPS-95.
Regional offices are instructed to act within these guidelines without escalating cases to zonal or head offices. This directive, approved by the Central Provident Fund Commissioner, aims to streamline PoHW case processing while ensuring compliance with legal and procedural requirements.
EMPLOYEES PROVIDENT FUND ORGANISATION
(MINISTRY OF LABOUR & EMPLOYMENT, GOVERNMENT OF INDIA)
Head Office
NBCC Centre, Block-2, Ground Floor- 4″ Floor, East Kidwai Nagar, New Delhi-110023
Website: w.ww.epfindia.gov.in, www. epfindia.nic.in
File No: pension/V1/POHW/2024-25/efile-951977/09 Date: 18.01.2025
To
All ACC (HQ)/ACCs, Zonal Offices
All RPFCs/APFCs/OICs, Regional Offices
Subject: – Clarifications on policy issues related to processing of Pension on Higher Wages cases — reg.
Madam/Sir,
Certain policy issues were raised by the field offices related to processing of pension on higher wages cases. These issues were subsequently taken up with the Ministry of Labour & Employment (MoL&E) for consideration and approval.
2. The following clarifications are issued that have the approval of the Hon’ble Minister of Labour & Employment:
| Issue | Clarification/ Approval |
| Pension computation on Pro-rata basis | The pro-rata calculation of pension is provided in Para 12 of the EPS and is equitable, treating both categories of pensioners i.e. pensioners under wage ceiling and those with higher wages on an equal footing. Further, the Hon’ble Supreme Court had also not found the same ultra-vires. Accordingly, MoL&E has agreed with the computation of pension on pro-rata basis for the Pension on Higher wages cases. |
| Exempted Establishment’sThe eligibility for PoHW to be based on Trust Rules | eligibility for PoHW cases should be determined on the basis of the extant trust rules of the exempted establishment, in consonance with the directions of Hon’ble Supreme Court in Sunil Kumar case. Further, in case the Trust rules are amended post decision dated 04.11.2022 in Sunil Kumar Case, applications of members of such Trusts may not be considered. |
| Netting of PoHW Dues The against Pension Arrears | eligibility for PoHW is crystallized only when the dues (with interest) have been received in the pension fund and netting of these dues against the pension arrears may not be appropriate. That apart, it would also create issues with deduction of tax at source as the pension arrears as well as the higher wage pension would attract TDS as well as tax in the hands of the ensioner. |
| Reckoning wage arrears that are payable retrospectively |
The revision of wages with retrospective effect were not deliberate or wilful default on part of the employers. Therefore, such wages should be accounted for against the respective months for which the arrears were meant. In such cases, it would not be appropriate to recover damages under section 14B. However, the interest on such dues (either from EPF Contribution or through Demand Letters) may be recovered up to the date of retirement/cessation of membership of EPS-95, whichever is earlier.
It may be reiterated that no damages may be imposed in such cases. |
3. Accordingly, all the references received from the offices related to above issues stand disposed off. The OICs of Regional Offices shall take appropriate action within the ambit of the above without escalating the matter to Zonal / Head Office.
[This issues with the approval of CPFC]
Yours faithfully
(Chandramauli Chakraborty)
Additional Central PF Commissioner (HQ)
(Pension)
Exempted Establishment’s employees who were already applied for higher pension are eligible for higher pension or Not ?