The Ministry of Labour has approved the pro-rata norm to calculate higher pensions proportionate with the salary, the EPFO has said. A circular in this regard signed by Employees' Provident Fund Organisation (EPFO) Additional Central PF Commissioner (Pension) Chandramouli Chakraborthy has been sent to all zonal and regional offices.

The circular was sent even as various courts are still examining petitions challenging the pro-rata norm since it would calculate the pension after dividing the employees' service period into two.

The PF Commissioner's circular said apprehensions raised by various quarters were taken to the Labour Ministry's attention, and further instructions were issued with the Labour Minister's approval.

Other instructions
The higher pension eligibility of employees in 'exempted' organisations that have PF trusts to handle PF shares will be fixed based on the rules of the trust concerned. However, the trust's bylaws amended after the November 2022 Supreme Court's order in the pension case will not be considered.

An employee becomes eligible for a higher pension only after the pension fund receives the additional share. However, deducting the amount that has to be remitted from the pension dues is not practical. It will also affect deducting tax at source since pension dues are taxable.

If dues are allowed due to pay revision implemented with retrospective effect, the dues will be clubbed and disbursed with the respective month's salary. A penalty under Section 14-B will not be imposed since the dues are not a result of the employer's deliberate fault. However, the interest on the due amount will be appropriated from the EPF share or by demand letter.

The pro-rata provisions, in force since September 1, 2014, apply only to those employees remitting their share to the PF fund. The EPFO has decided on their salary limit. Accordingly, their pensions will be considered separately, at the maximum salary limit of Rs 6,500 from November 1995 to August 2014, and a ceiling of Rs 15,000 after September 2014.

This norm did not apply to those in the higher pension scheme till May 2023. With the scheme coming into force, the pension will be divided into two, though the ceiling of Rs 6,500 and Rs 15,000 will not be applied. This will lead to a reduced pension amount.

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Clear applications by February 7
The Central Provident Fund Commissioner has ordered the processing of all applications received for higher PF pensions by February 7.

In a letter to the zonal officers, CPF Commissioner Ramesh Krishnamurthy expressed disappointment over the inordinate delay in EPF offices processing the applications. Pension payment orders should be passed by January 24 on all verified applications. Offices with less than 5,000 applications should also process the applications by the same date. The letter also warned of action against officials failing to process and clear the applications without specific reasons within the set timeframe.

The letter noted that offices that have received less than 5,000 applications have caused an inordinate delay in processing them, and did not meet the January 10 deadline.

Guidelines to calculate the higher pension were issued on time, and additional data entry operators were also provided. Still, there was a grave failure in the timely clearing of the applications, the letter said, adding that the delay was due to the failure to prioritise applications for the higher pension.

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The commissioner also advised against repeatedly escalating to the central office issues that could be decided and settled at the zonal and regional office levels. The letter noted that some offices had completed the task on time.  

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