Bhadkamkar A V
The Employees’ Pension Scheme, 1995.
Section 12(2) – The formulae for monthly pension is Pensionable salary * Pensionable service /70.
Section 12(3)(b) – Past service pension for FPF1971 membership depends on salary and no. of years under FPF 1971 with minimum of Rs.80/- for 11 years or less on salary of Rs.2500 or less and maximum of Rs.170/- for 20 years or more for FPF1971 membership on salary of more than Rs.2500/-
The amount of Rs.80/- or Rs.170/- shall be multiplied by the factor in Table “B” corresponding to service under EPS1995.
Section 11 – Determination of Pensionable Salary:- (1) The Pensionable Salary shall be the average monthly pay drawn in any manner including on piece rate basis during contributory period of service in the span of sixty months preceding the date of exit from the membership of the Pension Fund and the pensionable salary shall be determined on pro-rata basis for the pensionable service upto the 1st day of September 2014, subject to maximum of six thousand and five hundred rupees per month and for the period thereafter at the maximum of fifteen thousand rupees per month.
Section 11 (3) – The maximum pensionable salary shall be limited to fifteen thousand rupees per month.
Section 10(1) – Pensionable service is the period of contributions paid under EPS 1995.
Section 10(2) – If Pensionable service is 20 years or more, it will be increased by adding a weightage of two years.
Live case – One employee joined the service on 01-07-1975. He was member under FPF 1971 from 01-07-1975 to 15-11-1995. (20 years 4 months) He attained the age of 58 years on 01-08-2018. He has paid pension contribution on salary of Rs.6500/- from 16-11-1195 to 31-08-2014 and on salary of Rs.15000/- from 01-09-2014 to 31-07-2018. (22years 8 months)
In this case preceding sixty months period is 01-08-2013 to 31-07-2018. As per section 11 (1), average pensionable salary will be @Rs.6500/- pm from 01-08-2013 to 31-08-2014 (13 months i.e. 6500*13=84500) and @Rs.15000/- pm from 01-09-2014 to 31-07-2018 (47 months i.e. 15000*47=705000). Therefore, average for 60 months = (84500+705000) =789500/60 works out to Rs.13158/- pm.
Pension = pensionable salary * pensionable service / 70. i.e. 13158*(23+2)/70= 4699.28.(Section 10(2),12(2).
As per my interpretation of the above sections, he is eligible for Rs.4699.28 pm pension according to section 11 (1).
However the EPFO has calculated average salary as under.
EPFO has counted actual days from 16-11-1995 to 31-08-2014 i.e. 6856 days @Rs.6500/- pm. It has added 365*2=730 days as 2 years weightage (section 10(2). As per EPFO section 11(1) pension = (6856+730)days *6500/365/70 comes to Rs.1930/-
EPFO has counted actual days from 01-09-2014 to 31-07-2018 i.e. 1430 days @Rs.15000/- pm. Pension for this period is 1430*13158/365/70 = 736. It has not taken Salary of Rs.15000/- but taken average salary from 01-08-2013 to 31-07-2018. (Salary from Sep14 to Jul 18 is Rs.15000/- pm. Pension for this period will be 1430*15000/365/70 Rs.840. EPFO has considered membership from 01-08-2013 to 31-08-2014 twice.
As per EPFO method pension for period 16-11-1995 to 31-07-2018 should have been 1930+840=2770.
Past service pension – In absence of form 3-A as on 16-11-1995, it has considered salary as less than Rs.2500/- . It has calculated for FPF service of 23 years 150*5.649 (factor in Table “B”) = 847. It is ok since form 3-A is not submitted for 1995-96 alongwith Form 10 (D).
As per EPFO Total pension = 1930 +736 = 2666.
As per our calculations pension should have been 5435. (4699+736) It is Rs.2769 (5435-2666) less than what it should be.
EPFO has worked out the average salary from 16-11-1995 to 31-07-2018 (23 years) instead of 5 years as per section 11(1).
Is EPFO right in doing so?
Bhadkamkar A V