Contribution on Salary exceeding the statutory limit Para 11(3) of EPS 1995 HO.No.Pension/Misc./2005

Document text

Telephone: (011)26172677 FAX : (011)26168431 Telegram: “KENDRIYA NIDHI” New Delhi E-Mail:cpfc@alpha.nic.in Employees’ Provident Fund Organisation (Ministry of Labour, Govt. Of India) Head Office Bhavishya Nidhi Bhawan, 14-Bhikaji Cama Place, New Delhi-110066 No Pension/Misc./2005 Dated: To All Regional Provident Fund Commissioners Regional Offices/ Sub Regional Offices. Subject:- Contribution on salary exceeding the statutory limit (Para 11(3)) of EPS’95 Attention is invited to the following circulars:- 1. Circular No.Pen/4(2)96/SLP/Vol.V/16598 dated 26.6.2004. 2. Letter No. Pen.4 (38).96/WB/59867 dated 1.12.2004. 3. Circular No.Pen/Misc/2006/Vol.I dated 25.4.2006. Instructions have already been issued by this office on the issue of contributing on a pay exceeding the statutory limit under Para 11(3) of the Employees’ Pension Scheme, 1995. However, the field offices are finding it difficult to take decisions. As a result this office has been receiving a number of references from field offices, not to speak of the volley of grievances being aired by the members through various channels. Therefore it has become necessary for this office to issue guidelines in a more clear term. While deciding the issue the following provisions may be kept in mind: 1) Under EPS there is no contribution payable separately. Under Para 3 of the EPS, from and out of the contributions payable by the employer in each month under Section 6 of the Act, the employer shall remit a part of contribution representing 8.33 percent of the Employees pay to the EPS. Therefore, it is only the employer’s share of contribution payable under Employees Provident Fund Scheme, 1952 that is being diverted to EPS to the extent as aforesaid. 2) Accordingly, the option to contribute on a pay exceeding statutory limit is available to a member only under Para 26(6) of the Employees Provident Fund Scheme, 1952 and not under Para 11(3) of the EPS. 3) In fact Para 11(3) clarifies the methodology of determination of pensionable salary only. 2 4) Since opting to contribute on higher pay to EPS means a contribution on higher pay to Provident Fund as well, Para 11(3) provision will apply to only such of those employees who have been contributing on a higher pay under Para 26(6) of the Employees Provident Fund Scheme, 1952. Accordingly the grievances may be classified into the following categories and the issues be decided. 1. In all such cases where the employee has contributed over and above the statutory limit either from 16.3.1996 or from the month in which his salary exceeded the limit after having exercised his option and the same having been accepted by the Office, the pensionable salary will be based on such salary. 2. If the option was not exercised at the time of salary crossing the statutory limit or on 16.3.1996, as the case may be and the contribution was deposited on salary exceeding the limit after receiving instructions from the Office before the date of issue of circular dated 22.6.2004, the department has the vicarious liability (restricted to the specific case only) of honouring such a commitment and hence the pensionable salary shall be on the actual salary i.e. on the salary (exceeding the statutory limit) on which the contribution was paid. However, this is subject to i) a satisfactory explanation to be obtained and taken on record from the officer who made such a commitment. ii) the employer having remitted the administration charges and other contributions on such higher salary. 3. In the cases where no option was given or no commitment was made by the concerned Office, but the contribution on higher pay was deposited by the establishment/ employee, on their own such excess contributions will be considered as erroneous contributions and the pensionable salary will be restricted to the statutory ceiling existing from time to time. So all field offices are requested to consider the grievances voiced under Para 11(3) in accordance with the above clarification and decide the issues at their level without referring them to the Head Office unnecessarily. (This issues with the approval of CPFC) Yours faithfully, (RAJESH BANSAL) ADDL. CENTRAL P.F. COMMISSIONER (PENSION) C:\Documents and Settings\Administrator\Desktop\circular1.doc C:\Documents and Settings\Administrator\Desktop\circular1.doc 3 Copy to: 1. PS to CPFC 2. FA & CAO 3. All Addl. CPFCs, Zone/ Head Office. 4. Director (NATRSS) 5. CVO 6. Director/Deputy Directors (Vig.) 7. All RPFCs (Pension) 8. All Zonal Training Institutes. 9. All Zonal Audit Offices. (K.V.SARVESWARAN) REGIONAL P.F. COMMISSIONER (PENSION)