New Employees’ Pension Scheme (EPS-2026) Removes Higher Pension Clause

Why in the News

The Employees’ Provident Fund Organisation approved EPS-2026, which removes a key clause that earlier allowed employees to opt for higher pension based on salary above ₹15,000. The decision was taken at the 239th meeting of the Central Board of Trustees (CBT) chaired by Mansukh Mandaviya.

Background

• The Employees’ Pension Scheme 1995 had a provision under Paragraph 11(4) allowing employees and employers to jointly opt for pension contributions based on salary above the wage ceiling (₹15,000 per month).
• This option had to be exercised within one year (2014-15) after the amendment.

Change in EPS-2026

• The EPS-2026 has removed Paragraph 11(4), calling it “obsolete.”
• Reason:
  • The clause applied only to a limited time window after the 2014 amendment.
  • The new scheme is being aligned with the Code on Social Security 2020.

Supreme Court Intervention Earlier

• In November 2022, the Supreme Court of India allowed eligible employees to apply for higher pension if they had missed the earlier option.
• Government data:
  • 15.24 lakh applications received
  • 3.93 lakh demand letters issued
  • 1.24 lakh pension payment orders issued

Key Provisions in New PF Rules

• Even though EPS-2026 removed the higher pension clause:
  • The Employees’ Provident Fund Scheme still allows employees and employers to jointly contribute above the wage ceiling.
  • Employees may also make additional voluntary contributions, though employers are not obligated to match them.

EPFO’s Concerns

The EPFO earlier argued that:

• EPS was meant mainly for low-income workers.
• Higher pension options created “reverse subsidy” where lower-paid workers indirectly supported higher-paid employees.
• The pension fund faces an actuarial deficit.

Significance

• Aligns pension rules with the new labour codes.
• Limits the higher pension option in the new scheme.
• Continues to raise debates on pension adequacy and fund sustainability.