Bhadkamkar A V

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

Author Bio

Qualification: Graduate
Company: Agrocel Industries Pvt Ltd.
Location: DADAR MUMBAI, Maharashtra, IN
Member Since: 18 Feb 2019 | Total Posts: 4

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16 Comments

  1. Shri says:

    Hi.
    Date of birth = May 26 , 1943
    Joining date for EPF = Nov 16, 1995
    Date of retirement = May 26, 2001
    Eligible years of service = 6 years
    Previous years of service prior to Nov 16, 1995 = 17 years
    Pensionable salary = Rs. 6500 (since this was the limit until Sept 2014)
    I was getting Rs. 666 – ROC of Rs. 67 = Rs. 599 as pension until Sept 2014 and from Sept 2014, I am getting Rs. 920.

    I am not sure if these calculations of 666 and 920 are actually correct. Can you please help clarify?
    Thanks

  2. Balachandran M says:

    I suggest to all who are cheated by EPFO to first ask for the calculation details through EPFO member login page by registering a grievance. They process grievance within days I think. With that go to Tribunal and if not solved take up in https://pgportal.gov.in/ , which is the central grievance redressal portal and many people get their grievance solved in a short period of weeks

  3. Chitra S says:

    DOJ : 01.06.1996,
    DOE : 17.09.2019,
    Pensionable Salary : Rs 14780.
    Actual Service : 23 yrs, 3 mts, 20 days
    NCP Days : 120 days,
    Pensionable Service : 22 Yrs, 11 Mts, 20 days,
    Weitage Service : 2 yrs,
    Date of Conmencement Pension : 19.09.2019.
    As per PPO Pension : Rs.2875.
    But as per section 12 of EPS 95 Formula is Pensionable Salary × Pensionable Service/ 70 and
    works out to = 14780 ×(((24×365)+(11×30)+20)/365)/70 ×= 14780 ×(9110/365)/70 =
    (14780×24.96)/70 = 368908.80/80 = Rs. 5270.13.

    Shortage of Pension = Rs.5270 – Rs.2875 = Rs.2395.

    Please guide me in this regard with respect to claim the difference, the whom the claim is to be lodged.

    CHITRA S

    1. TAPAS KUMAR BISWAS says:

      Pensionable Salary capping at Rs.6500/- upto service 31/08/2014 by ammendment GSR-609. So pension calculation upto service 31/08/2014 base on maximum Pensionable salary Rs.6500/- or last 60 months average salary which ever is lower.

  4. DAMODAR PRABHU KAVOOR says:

    Sir,
    I am also having the same problems. How do we go about?.Any association or we have to take up directly with the tribunal or court.Kindly suggest.

  5. LALITESHWAR MISHRA says:

    Through Notification GSR NO. 609(E) dated 22.08.2019 Pro-rata was introduced by EPFO, but Honourable Kerla High Court quashed entire notification no. GSR No. 609 and being aggrieved by order of Honourable Kerla High Court EPFO filled SLP in Supreme Court but Honourable Supreme Court also dismissed SLP at the time of admission.

    Thereafter EPFO filled review petition in Honourable Supreme Court which has not been listed yet.

    In the meantime more than 305 contempt petition filled in Kerla High Court and Kerla High Court got order implemented and in some states EPFO also averaged salary on 12 months basis in case of post retiree 01.09.2014.
    Now notification No. GSR No. 609 (E) became ineffective. Pensioner can move to Court and also to Directorate of Public Grievance.

    For any assistance you may call me no. 9334385645

  6. Srinivas P says:

    It is grossly wrong on the part of EPFO to to calculate pension arbitrarily to suit it’s own benefit and in violation of the provisions of EPS, 1995. The formula for calculating pension as given in Section 12 of EPS, 95 is ” (pensionable salary x pensionable service) / 70 “.

    Pensionable salary is the average wages of the preceding 60 months from the date of exit from the scheme. Calculating average wages using data beyond preceding 60 months (as done in this case) is pure violation of the procedure laid down in Section 11 of EPS 95.

    Pensionable service is simply the length of service in years (from 16.11.1995) and with addition of 2 more years upon rendering 20 years of service.

    Once the EPFO seized with the pensionable salary and pensionable service, the data so arrived must be placed in the formula only once (not multiple times as done here) to arrive at the pension.

    It appears EPFO is doing gimmicks in the background (which is certainly not as per provisions of EPS 95) to its own benefit, which is totally condemnable. May be a Public Interest Litigation is the need of the hour to protect the rights of the pensioners.

  7. Subhash Sharma says:

    Also facing same problem. Local EPFO inform this is their set formula. Everywhere we read monthly salary as average salary of past 60 months. This is big cheating with innocent pensioners.

  8. Jaikrishnan s says:

    Calculation of EPS Pension
    1. Date Of Birth : 07.11.1960
    2. Date of Joining EPF : 07.11.1993
    3. Date of Retirement: 31.03.2017
    4. Date of EPS application 31.03.2018
    Average Pensionable salary for last 60 Mths = 10892/
    (A) No of days from 16.11.1995 to 31.08.2014 =6864 Days.
    (B) Add bonus 2 Years =730 Days
    (C) Total No of Days =(A+B) =7594 Days
    (D) Pension for this period u/s 11 (1)= 6500 x 7594
    ———————- =1932 or rounded off 1932/……(1)
    365 x 70
    No of Days from 01.09.2014 to 31.03.2017 = 943 Days
    Pension for this period u/s 11 (1) =10892x 943 = 402 /……(2) ————–
    365 x70
    Past service Benefit 07.11.1993 to 15.11.1995 is less than 11 Years So Factor is X. As form 3A was not submitted along with 10D it was assumed that the pensionable salary was <2500 and hense X = 80
    Service from 15.11.1995. to 31.11.2018 was less than 23 years . So Multiplying Factor is 5.649
    Hense past service Benefit U/S12 (3) (B) = 80x 5.649 = 452…………….(3)
    Total Pension = 1932 +402 +452 = 2786 or rounded off to 2785/

  9. Kul says:

    Sir,

    Good that you raised this issue. My understanding is that Nil rated supply should appear in Table 8 only as specific table is given. Even though it is B2B.
    Secondly, in B2B, when we speak of 0% rate, it is not Nil rate, because in GST or any VAT terminology, 0% should mean zero rated supply and not NIL rated supply.
    The problem of invoice matching will be there, but it would be more relevant for ITC related invoices.

  10. S V Ramanan says:

    Dear Sir,

    I am also having the same problem. I have written many letters to CPFC and Ministry of Labour but no reply has come. The respective RPFC informing that the computer is calculating like that, I even argued that the programming done in wrong manner to calculate the pension. I do not know what to do. Planning to file with Tribunal.

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