Employees can now choose to contribute more to EPS, which is presently restricted at 8.33% of the maximum Rs 15,000 pensionable wage. Employees will have the choice in the new window to have their employers deduct 8.33% of their real basic wage for the EPS pension.
Employers and employees will be able to sign a joint form requesting that EPFO remove 8.33% of their real monthly basic wage for EPS. This will result in a greater corpus and a higher pension for employees.
What’s the issue?
After an amendment in 2014, the Central Government increased the pensionable wage ceiling under EPS from Rs 6500 to Rs 15,000. Employers and members were forced to contribute 8.33% of their real earnings to the plan if the maximum was surpassed, according to the new regulations. The EPFO subsequently gave all EPS members a six-month chance to choose the revised scheme for a better pension. Many subscribers, however, squandered this chance. As a result, a fresh window has been created in response to a Supreme Court decision issued in November of last year.
"...all the workers who did not exercise their choice but were entitled to do so but were unable to do so due to the authorities' interpretation of the cut-off date," the Supreme Court stated in its November 4, 2022 decision.
Who is eligible to apply?
According to the EPFO circular of February 20th, 2023, the following employees, along with their employers, can submit the joint option to the relevant regional office -
Employees and employers who contributed on pay in excess of the Rs 5,000 or Rs 6,500 wage limit
Employees and employers who were EPS members but did not utilize the joint option in the previous window. Employees who were members before September 1, 2014, and remained members on or after that date.
How to apply?
If you are an eligible subscriber, you will be able to execute the joint option on the joint option form before the regional provident fund office.
It should be noted, however, that the Regional PF Commissioners will offer further information about the application process deadlines soon. The EPFO will provide a dedicated URL facility for all applications that must be digitally logged.
What’s the contribution rule for EPFO?
Employees and employers now contribute 12% of the employee's base salary and dearness allowance to EPF. While the employee contributes 100% to EPF, the employer contributes 8.33% to EPS and 3.67% to EPF.
