Notification » State » India (All States) » Additional contribution of 1.16 percent on higher wages with respect to pension will be on the employer
Additional contribution of 1.16 percent on higher wages with respect to pension will be on the employer
- May 3, 2023
- Posted by: AscentHR
- Categories: India (All States), Notification
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The Ministry of Labour and Employment, vide notification No. S.O 2061(E), dated 3rd May, 2023, has clarified that, in respect of members who have exercised joint option for contributing on higher wages towards pension scheme and who are found eligible, the employer’s contribution shall be nine and forty-ninth per cent. (9.49%) of the wages of each member, increasing one and sixteenth per cent. (1.16%) from the extant eight and one-third per cent. (8.33%). The increased contribution shall be applicable to basic wages, dearness allowance and retaining allowance to the extent such basic wages, dearness allowance and retaining allowance exceed fifteen thousand rupees per month. This will be applicable effective from 1st September, 2014.
Effective from 1st September, 2014 the Employees’ Pension Scheme, 1995 has been amended and the provision to contribute an additional contribution of 1.16 percent on salary exceeding Rs.15,000/- per month by members who are entitled to contribute on higher wages towards Pension Scheme was introduced. However, the Hon’ble Supreme Court of India, in its significant ruling, dated 4thNovember, 2022, has ruled that the requirement of the members to contribute at the rate of 1.16 per cent of their salary to the extent such salary exceeds Rs.15,000/- per month as an additional contribution under the amended scheme, is ultra vires and the operation of this provision had been suspended for a period of six months, merely to facilitate a window of appeal by EPFO. This time period of six months had been given to the authorities in order to make adjustments in the scheme, so that the additional contribution can be generated from some other legitimate source within the scope of the EPF and MP Act, 1952. One of the option given by the court was to enhance the rate of contribution of the employers.
In continuation to the above said notification, we are expecting a detailed circular from the Employees’ Provident Fund Organisation, based on which we will be sending our further notes.
Please refer to the below government notification for more details:
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