If EPFO ​​changes the pension formula then those opting for higher pension will suffer

New Delhi: The deadline for EPFO ​​members to opt for higher pension is fast approaching. But for them it has become a mess of life. The reason for this is that many things are not clear in it. The Supreme Court has ruled in favor of the eligible members but not everyone is sure about the future. The authorities have put many hurdles in the way of higher pension. Members fear that they may do the same in future. Their concern is especially about the change in pension calculation method from the previous date. Let us understand how the change in the method of pension calculation can affect the EPS member. The question is whether EPFO ​​can make such a change in future or not. The deadline for opting for higher pension is June 26.

what is current formula

Its current formula under EPS 95 is as follows: Monthly Pension = (Pensionable Service*Pensionable Salary)/70. That is, the member whose pensionable service and pensionable salary is more, his pension will also be more. The pensionable service period will remain the same in each scenario but the pensionable salary can be changed. If there is any change in EPFO ​​and this may reduce the pensionable salary, then the member will get less pension. Prior to September 1, 2014, the pensionable salary was calculated on the basis of the average salary of the last 12 months. But later it was changed.

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Pooja Ramchandani, partner, Shardul Amarchand Mangaldas & Co, said the method of calculation of pensionable salary was changed in September 2014. According to this, pensionable salary will be calculated on the basis of average salary of 60 months before leaving the job. This is the formula for members applying for higher pension. EPFO has resolved most of the questions regarding higher pension through a circular. But this screw is still stuck as to how the pension will be calculated. EPFO says that another circular will be issued in this regard. Only after that the situation will be clear.

Can EPFO ​​change the formula

When people move forward in their career, their salary also increases. That is, if the average salary of someone’s last year is considered as pensionable salary, then he will get more money. If the period for drawing average salary is extended, then he will get less pension. In the current formula, the pensionable salary is calculated on the basis of the average salary of the last 60 months. Members feel that if they apply for higher pension, they will continue to get pension on the basis of this formula. If there is a change in this formula in future, the members will be at loss.

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The question is whether EPFO ​​can change the pension formula in future with retrospective effect. Sonam Chandwani, Managing Partner, KS Legal & Associates, said that according to Section 7 of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, a rule can be changed retrospectively. Some experts believe that the government will have to make a law for this. Ramchandani said that any change in the EPS scheme can be done only by amending the law. The last time the formula was changed, it was challenged in court. But the court upheld the change.