Employees’ Pension Scheme, 1995 – Validity of 2014 Amendments Upheld with Directions on Higher Pension and Contribution

Case Name: Employees Provident Fund Organisation & Another v. Sunil Kumar B. & Others (with connected appeals and writ petitions)

Citation: 2022 INSC 1171

Date of Judgment: 4 November 2022

Bench: Justice U.U. Lalit (CJI), Justice Aniruddha Bose, and Justice Sudhanshu Dhulia (Full Bench).

Held: The Supreme Court upheld the validity of the 2014 amendments to the Employees’ Pension Scheme, 1995, which increased the pensionable salary ceiling from ₹6,500 to ₹15,000, extended the salary calculation period from 12 months to 60 months, and introduced an additional 1.16% contribution on salary above ₹15,000 for employees opting for higher pension. However, the Court read down certain provisions, holding that the six-month option period was unreasonably short and that the 1.16% contribution lacked statutory backing.

Summary: The case arose out of conflicting High Court rulings which had struck down parts of the 2014 amendments, relying on R.C. Gupta v. Regional Provident Fund Commissioner. Employees argued that the amendments unreasonably restricted their right to higher pension and imposed burdens without statutory sanction. The Supreme Court held that the Central Government had power to amend the scheme under Section 7 of the EPF Act and that the amendments were not ultra vires. It clarified that employees who had exercised joint options earlier remained entitled to higher pension, that exempted establishment employees were also covered, and that retired employees without earlier options could not claim fresh rights. The Court held that while the 2014 amendments were legally valid, procedural aspects required modification to ensure fairness.

Decision: The Supreme Court partly allowed the appeals, upheld the 2014 amendments but struck down the compulsory 1.16% employee contribution in its existing form, extended the option period by four months from the date of judgment, and directed the Government to identify alternative sources for funding. High Court judgments striking down the amendments were set aside to this extent.