Higher pension from EPF: Will EPFO extend the deadline again amid lack of clarity?

 

EPFO Higher pension deadline: Despite the looming deadline of June 26, 2023, to apply for a higher pension with the Employees Provident Fund Organisation (EPFO), there is still a lack of clarity on the range of issues such as how payment and calculation will be done, how discrepancies between wage records maintained at EPFO level and that maintained at the level of employer will be resolved. Similarly, what would happen if one of the employers is no longer in existence or has merged. Given the confusion, experts say the deadline may be extended again, although chances are low as the deadline has already been extended twice by the EPFO.

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“The EPFO is expected to issue additional guidance on how the higher pension would be calculated. Further, once the EPFO scrutinises each application, there could be lack of clarity on how transfers from the EPF account to the EPS account will be undertaken and how discrepancies between wage records maintained at EPFO level and that maintained at the level of employer will be resolved. What would happen if one of the employers is no longer in existence or has merged? These are some of the open questions,” said Sowmya Kumar, Partner, INDUSLAW. 

Will the deadline be extended again? “For those who have retired how the payment and calculations will do done is still not clear, and therefore there are chances that the deadline can be extended again,” said Shantala Kumble, Senior Vice President, International Money Matters, a Sebi-registered investment advisor.

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“It is possible that the deadline may be extended, although given that the deadline has been extended twice already, the EPFO may not be inclined to a further extension,” said Kumar. 

The expert also says that there is compliance burden due to multiple circulars being issued and tracking of request once EPFO scrutinises each application. “While the EPFO has been issuing clarificatory circulars, these are piecemeal, and there is no overarching circular that clearly lays down the entire process so that the employee is fully aware as to what would happen once the application is filed. Given this approach, employees and employers have to keep a tab on the various circulars issued, the portal on which the application is made, and track all requests/directions issued by the EPFO once they scrutinise each application—there will definitely be an increase in the compliance burden,” said Kumar.

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The Supreme Court, in its November 2022 order, ruled that employees who were part of the EPF before or on September 1, 2014, but could not apply for higher pension, can now submit fresh options within four months which later got extended up to May 3, 2023, and then June 26, 2023. However, the process for submitting joint application by the employees was earlier extremely complicated, particularly a mandatory requirement in the form that required furnishing details of the option under para 26 (6) of the Scheme, 1952. Clause 26(6) allows employees to jointly request with their employer to contribute a higher amount to the fund, exceeding Rs 15,000, to claim a higher pension. The Kerala High Court while recognising the enabling nature of Clause 26(6) and the proximity of the cut-off date directed the EPFO to make provisions in the online facility to furnish options without production of the document under Clause 26(6).  

Recently, the EPFO told field officers to validate the joint option application within 20 days of its receipt without any delay. An EPFO circular issued on April 23 stated that the field office would examine applications and joint options for higher pension. “The joint option uploaded by the pensioners as well as employers have not been processed by the respective Field Officers of the EPFO. The matter was discussed at EPFO Head Office level which was presided over by the Secretary, Labour and Employment.  On review of the progress made by field officers, it was found that scrutiny of applications for claiming higher pension/validation of joint option is very slow in Field officers,” BC Prabhakar, Advocate and President of Karnataka Employers’ Association, told BT.