Kochi: The Kerala High Court has ordered the EPFO to include the salary revision arrears and dearness allowance (DA) received retrospectively in the PF pension calculation.

The order, issued by Justice N Nagaresh, was in response to a petition filed by K S Mohanan, who retired from the Kerala Cooperative Milk Marketing Federation (Milma) on October 31, 2014. After his retirement, Mohanan repaid Rs 5,18,478 to the higher pension scheme following a court directive and was granted a pension of Rs 12,065 by the Employees' Provident Fund Organization (EPFO).

However, through an RTI query, the petitioner discovered discrepancies in the pension assessment. The EPFO had not considered DA dues from January 2010 to July 2014, as well as pay revision arrears, while calculating his pension. Instead of the average salary of Rs 44,776 for the last 60 months of his service, the EPFO assessed it as Rs 38,795.

When approached about the oversight, the EPFO cited that the arrears were paid in a single instalment. It claimed that for these arrears to be included in the pension calculation, the employer should have paid the associated interest and penalties for late payment as per Section 7Q of the PF Act.

The employer, however, clarified that the arrears were paid in a lump sum due to the retrospective effect of the pay revision. It argued that he was not liable to pay interest as there was no delay on his part. Subsequently, the employer also recalculated the monthly instalment of the due amount and submitted it to the EPFO.

Considering these arguments, the court ruled that the EPFO had received the appropriate PF contributions related to the pay revision arrears and therefore could not deny pension benefits on this ground. Justice Nagaresh also observed that the EPFO had no justification prima facie for excluding salary components from certain months when calculating the pension.

The court held that reducing the pension on the pretext that the employer failed to pay interest was unwarranted. It directed the EPFO to issue a revised pension order within two months, ensuring that the dues are fairly included in the calculation.