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EPFO clarifies on method of calculating dues of members who apply to contribute on higher wages towards pension

The Employees’ Provident Fund Organisation issued internal circular No. Pension/SupremeCourtjudgement/PoHW/2022/312, dated 11th May, 2023, directing its regional offices regarding the method to calculate dues of the subscribers who have opted to contribute towards pension scheme on higher wages, as per the recent Supreme Court judgment, dated 4th November, 2022.

It is also clarified by the Employees’ Provident Fund Organisation that, 8.33% of employer share on higher pay from the date the pay exceeds wage ceiling, and 1.16% of employer share on higher pay above Rs.15000/- a month will be added for calculating the dues. This amount will be adjusted from the member’s PF contributions, if there is sufficient balance in their PF account.

Process for calculation of dues:

  1. Each member’s case shall be processed in a separate file, created in e-office, with clear marking of the application id.
  2. In case of exempted establishments, the wage details for the entire period and the matching contribution should be available with the exempted establishment and must be  consistent with the records of the trust.

Below components will be calculated month wise:

  1. 8.33 % of employer’s share on higher pay from the date the member has started to contribute on higher wages.
  2. 1.16% of employer share on higher pay above Rs.15000/- with effect from 1st September, 2014.

     iii.  The above two components will be taken from the amount already deposited in to the Pension Fund and balance, if any, will be taken from the EPF contributions.

  1. The interest to be charged on dues as calculated above for un-exempted establishment shall be the interest earned by the member at the rate declared by the Government time to time, and for exempted establishment, the interest will be at the rate declared by the trust, or as declared by the Government, whichever is higher. 

After calculating the above dues, the applications will be classified in below manner:

  1. Applications with respect to which all the dues have already been fully remitted to the EPS in the due months.
  2. Applications with respect to which dues has been not remitted to the EPS, but adequate balance is available in the member’s PF account, which can be diverted to EPS.

     iii.  Applications with respect to which dues has not been remitted to the EPS and there is inadequate balance in the PF account to adjust.

EPFO will inform the member about his/her status regarding the dues in each of the above case through latest employer and will require the member to submit written consent in case of diversion of fund. In case of inadequate fund, EPFO will issue a demand notice in a specific format given in the circular asking the member to pay the dues. The member will be given 3 months’ time to deposit and to give the consent for diversion of funds.

The method of payment of dues by the member will be through online facility provided by EPFO if any, or through cheque with details like application ID, UAN/PPO number, name and mobile number, demand notice number and date written on the back side of the cheque.  

Once all the above processes are complete, EPFO will verify them and will start its internal process and a final speaking order from EPFO will be communicated to the member through letter or email, with a copy to the latest employer.

The EPFO has further stated that the method of computation of pension will follow through subsequent circular.

Please refer to the below government notification for more details:

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