Higher EPS-95 Pension: Employer Can’t Contribute Retrospectively Above Statutory Limit, Rules Kerala HC

Higher EPS-95 Pension: Employer Can’t Contribute Retrospectively Above Statutory Limit, Rules Kerala HC The High Court held that the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, doesn’t permit retrospective enhancement of pension contributions. The Kerala High Court has ruled that employers cannot retrospectively contribute to the Employees’ Pension Scheme, 1995 (EPS-95) beyond the statutory wage ceiling to secure higher pension benefits for employees. The judgment, delivered on July 21, 2025, came in a case involving 67 retired employees of Cochin International Airport Limited (CIAL). This judgment has significant implications for higher pension claims across the country. The Division Bench set aside a 2022 Single Judge order that had directed the Employees’ Provident Fund Organisation (EPFO) to encash a demand draft submitted by CIAL towards an alleged shortfall in provident fund and pension contributions. Recommended Stories The court held that the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, does not permit retrospective enhancement of pension contributions, particularly when contributions during service were limited to the statutory wage ceiling. What Is EPS-95 Scheme? Launched in 1995, the Employees’ Pension Scheme is a social security programme under EPFO that provides monthly pension to organised sector workers after retirement, disability, or death. It is funded through 8.33 percent of the employer’s EPF contribution (subject to the wage ceiling), along with government support. Pension amounts are linked to pensionable salary and years of service, and for most retirees remain modest. The pension amount is typically between Rs 1,000 and Rs 3,000 per month, based on older wage ceilings. Case Background The 67 employees were covered under the EPF Act and EPS-95. Between 1995 and 2003, CIAL contributed to the provident fund and pension fund based on the statutory wage ceiling (then capped, later fixed at Rs 15,000), not on the employees’ actual higher salaries. After the employees had retired, CIAL made representations between 2018 and 2020 expressing willingness to deposit the differential contribution based on actual salaries, along with grown interest, to enable higher pensions. During the proceedings before a Single Judge, CIAL deposited Rs 78.14 lakh through a demand draft, of which only Rs 13.24 lakh represented the employer’s contribution and the rest was interest accumulated from 1995 to 2022. The Single Judge directed EPFO to encash the amount and compute dues under Sections 7Q and 14B of the EPF Act. EPFO challenged this order before a Division Bench. High Court’s findings Allowing EPFO’s appeal, the Kerala High Court held that retrospective application for higher pension is legally unsustainable. The court emphasised that the EPF and EPS funds operate on an actuarial basis, where contributions are invested over time and benefits are paid out from the accumulated corpus and interest. The court noted that there was no deficiency or shortfall in CIAL’s contributions during the relevant period, as payments were made strictly in accordance with the statutory wage ceiling. Importantly, the employees and the employer had never exercised the “joint option" under Paragraph 26(6) of the EPF Scheme, 1952, which allows contributions...

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