The Employees' Provident Fund Organisation (EPFO) has taken down from it website a circular, which stated that the Union Ministry of Labour had approved the application of pro-rata norms for higher pensions.

The circular, which was visible till two days, went missing without any stated cause from the website even as experts questioned its legal standing.

Legal experts said that a norm for calculating higher pensions cannot be implemented by issuing a circular since its is not included in the EPS rules. The rules should be amended by Parliament or approved by the EPFO Central Board of Trustees after deliberations, they pointed out.

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It has been alleged that the circular, claiming Labour Ministry's approval for implementing pro-rata norms for higher pensions, was meant to create misunderstanding. Additionally, petitions against pro-rata norms have been pending before several courts. The EPFO itself had clarified this in a note presented as the agenda of the previous CBT meeting.

The EPFO has been reiterating that the Supreme Court had not found any breach of law in the pro-rata norms. However, the pro-rata norm was not implemented for higher pensions when the apex court was hearing the case, and hence it was not disputed.

Higher pensions were disbursed without applying the pro-rata norms for about nine years after it had come into force in September 2014. Implementation of pro-rata norms would slash the pension amount being paid.

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It has also been pointed out that the circular directing the benefit of two year's weightage for those who had superannuated after 20 years in service to be calculated based on their pre-September 2014 salaries, too, was against the law.

Non-existent rule

The amendment to the EPS rules in 2014 clearly states that the pro-rata norms would apply only to those who had contributed to pension funds for the Rs 6,500, Rs 15,000 salary scale. It also mentions that a higher salary would be considered for those opting for higher pensions. The EPFO's internal circular issued in February 2024 says the average salary of the 60 months before superannuation, or the highest salary before September 2014 — whichever is lesser — will be considered. This clause is not in the EPS rules. Neither the EPS rules of the Supreme Court has empowered the PF commissioner to change the method of calculating the pension. The PF commissioner has employed a non-existent right. The court is not likely to accept it.

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