Why EPFO has extended the deadline to apply for a higher pension again

The Employees’ Provident Fund Organisation (EPFO) has extended the deadline for filing applications to opt for a higher pension till 11 July. This is the second such extension in the past two months. This time, however, it is extended by three months for the employer and 15 days for the employee (member), according to PTI. Employers/companies can file their applications until 30 September while employees are given time until 11 July. Earlier, the Employees' Pension Scheme (EPS) extended the closing date for applications for increased pensions from 3 May to 26 June. These extensions were made necessary by the long delays in the release of the pension computation method and the clarifications that were issued. According to an EPFO statement, 16.06 lakh applications are thought to have been submitted thus far for the higher pension option. Technical snags plague the EPFO portal Despite being regularly reported by both employees and employers, the EPFO has not been able to resolve the numerous technical issues that afflict the pension process. This is true even though the government has stated that it is willing to solve “practical” systemic issues and that every effort would be made to ensure that no eligible applicant loses the chance to apply as a result of fund manager-side technical difficulties, as per Times of India. Many applicants have expressed concern about the ambiguity around the amount that must be deposited in order to qualify for the higher pension due to ongoing problems. This problem is particularly faced by people who may have taken money out of their PF accounts in recent years and may not have enough money left over to choose a higher pension. According to Indian Express, some people encountered issues with application processing, while others face trouble submitting their applications since they made modifications to their Aadhaar, which is connected to their EPF Universal Account Number (UAN). A section of people is facing trouble validating joint options , which must be done by both employers and employees. Many employers have mentioned their inability to locate historical data regarding the salary of previous employees. It’s been reported that up to 30 firms declined to validate the joint option. 15 lakh applications were submitted to the authorities, of which three to four lakh were from retirees and others were from existing subscribers. Another issue is that a subscriber might have chosen a greater pension because there was no estimate of the required amount for the pension, but since the pension plan as a whole does not permit exit, they might have trouble opting out if they decide they no longer want to continue. The newspaper also quoted its sources as saying that authorities are taking their time processing these applications since they are hesitant to approve these adjustments without sufficient proof. Higher pension scheme Initially, a pension plan was not included in the Employees’ Provident Funds and Miscellaneous Provisions Act of 1952. EPS was only created in 1995 and is now managed by EPFO. Both the company and the employee contribute 12 per cent of the employee’s base pay, dearness allowance, and retention allowance, if applicable, to the EPF. The employee’s full contribution goes to the EPF, while the employer’s 12 per cent contribution is divided into 8.33 per cent for EPS and 3.67 per cent for the EPF. For workers making less than the minimum wage, the government of India contributes 1.16 per cent towards their pension. Employees do not make pension contributions. The amendments in the Employees’ Pension Scheme, 2014 were upheld by the Supreme Court in a decision on 4 November last year, giving employees who were EPS members as of 1 September 2014 another chance to contribute up to 8.33 per cent of their “actual” salaries — as opposed to 8.33 per cent of the pensionable salary, which is capped at Rs 15,000 per month — towards pension, explained Indian Express. The maximum pensionable wage at the time of EPS’ implementation was Rs 5,000 per month. Later, this was increased to Rs 6,500, and as of 1 September 2014, it was revised to Rs 15,000. Currently, the pension contribution is 8.33 per cent of Rs 15,000, or Rs 1,250, unless the employee and employer have chosen to contribute at an amount that is higher than the pensionable pay. The EPFO said in a circular last month that members who choose the higher pension will pay an additional payment to the EPFO equal to 1.16 per cent of their basic wages. The extra contributions already made to the pension fund were to be transferred to the member’s provident fund account along with interest if they had not chosen to contribute in excess of the pensionable salary cap within the specified or extended period. The eligibility If an employee has at least 10 years of service and retires at age 58, the EPS provides them with a pension after that age. A member may be eligible for an early (reduced) pension if they stop working between the ages of 50 and 57. The initial pension scheme determined the pensionable salary as the average of the wages received over the previous 12 months prior to leaving the pension fund. This was increased in 2014 to an average of 60 months before leaving. For those choosing a pension linked to higher wages, the EPFO recently explained the method of computation in a circular to its field offices. It stated that the pension would be calculated using the average monthly pay for the 12 months prior to exit in cases where the pension started before 1 September 2014, and using the average monthly pay drawn for the 60 months prior to the date of exit from the pension fund in all other cases. Once the higher pension system is operational, subscribers are anticipated to have a three-month window to pay the dues; otherwise, they will be deemed ineligible. Additionally, EPFO also released the Excel utility-based calculator to estimate dues that one has to pay either from their EPF balance or their own savings if required. EPFO The Employees’ Provident Fund Organisation (EPFO), a non-constitutional organisation overseen by the Ministry of Labour and Employment, tries to encourage employees to save money for retirement through a number of programmes that are available to Indian workers. Employees' Provident Fund (EPF) , one of its core programmes, is thought to be an obligatory contribution programme for workers. In order to maintain the financial stability of employees, both employers and employees may pay monthly contributions. With inputs from agencies Read all the  Latest News ,  Trending News ,  Cricket News ,  Bollywood News ,  India News  and  Entertainment News  here. Follow us on  Facebook,  Twitter and  Instagram.