Pensioners Can't Be Denied Benefits For Not Exercising Joint Option Before Employees Pension (Amendment) Scheme 2014: Punjab & Haryana High Court

The Punjab & Haryana High Court has said that the retired employees who did not exercise the joint option before September 1, 2014, cannot be automatically excluded from Employees Pension (Amendment) Scheme 2014.

Pertinent to note that the Apex Court in 2022 in Employees Provident Fund Organization versus B Sunil Kumar said that the employees, who were entitled to join the pension scheme but could not do so as they did not exercise the option within the cut-off date, should be given an additional opportunity as there existed lack of clarity regarding the cut-off date in view of the High Court judgments invalidating the provisions of the Employee's Pension (Amendment) Scheme, 2014. Therefore, the Court exercised its powers under Article 142 of the Constitution to extend the cut-off date.

Justice Sureshwar Thakur and Justice H.S Grewal rejected that the Employees' Provident Fund Organisation's (EPFO) claim that retired employees who did not exercise the joint option before September 1, 2014, automatically stood excluded from beneficial 2014 Scheme.

Brief Background 

The Employees Provident Fund and Miscellaneous Provisions Act, 1952 was enacted on March 4, 1952, followed by the notification of the EPF Scheme, 1952 on September 2, 1952. Under Section 6, employers must deduct 10–12% of employees' wages (initially 6.25%) and match it, depositing both shares with the EPF department by the 15th of each month.

An "excluded employee" is one whose salary exceeds Rs. 15,000/month, and such employees are not mandatorilycovered under EPF. However, through Para 26(6) of the EPF Scheme, employers and employees can jointly opt to enroll higher-earning employees.

Later, the Employees Pension Scheme (EPS), 1995 was introduced under Section 6A of the 1952 Act. It mandates that 8.33% of the employer's contribution goes to the pension fund, while the Central Government contributes 1.16%. However, for employees earning above Rs. 6,500 (now Rs. 15,000), contributions from both employer and government are capped at that wage ceiling.

On 16.03.1996, a proviso to para 11(3) of EPS, 1995 was added, allowing employees to contribute to the pension fund based on their actual (higher) wages, but only if both employer and employee jointly opted in within one year from that date, starting either from the scheme's commencement or from when the employee's salary exceeded the wage ceiling, whichever was later.

On 22.08.2014, the Central Government raised the wage ceiling from Rs. 6,500 to Rs. 15,000 in both the EPF and EPS schemes, and removed the proviso to para 11(3) of EPS, effectively ending the joint option for higher pension contributions from 01.09.2014. However, in the R.C. Gupta case, the Supreme Court struck down the department's cutoff date for submitting such joint options.

Following the R.C. Gupta case, circulars were issued in 2017 stating that if employees had already contributed on higher salaries, no joint option was needed. The Supreme Court reaffirmed this in the Sunil Kumar B. case. Despite this, new circulars in late 2022 and early 2023 required employees to re-exercise their options, and reduced pensionsto the wage ceiling, which lead to filing of batch of pleas.

The EPFO submitted that after the Sunil B. Kumar judgment, EPFO issued a new circular on 29.12.2022, superseding earlier ones. EPFO stated it had mistakenly accepted joint options and granted higher pensions to some employees post-01.09.2014, which was not legally valid, as the relevant provision had been deleted. It was argued that petitioners, who earned above the wage ceiling and did not exercise joint options during service, cannot claim higher pension now. The department contended that courts cannot revive deleted provisions, and overpaid pensions may need to be recovered.

After hearing the submissions, the bench noted that the Supreme Court in R.C. Gupta's case (2-judge bench) held that the cut-off dates for exercising joint options under Para 11(3) of the EPS, 1995 were not mandatory, allowing flexibility if higher contributions were made. However, the provision was deleted in 2014, and a new Para 11(4) was inserted.

Later, the three-judge bench in Sunil Kumar B. clarified that:

• Employees who exercised joint option under Para 11(3) and were in service as of 01.09.2014 are covered under the amended Para 11(4).

• Employees who did not exercise the option before retirement or had retired before 01.09.2014 without opting in are not entitled to benefits under the 2014 amended scheme.

• Continuity of service and proof of option are essential for eligibility.

• The Sunil Kumar B. judgment overrides the earlier R.C. Gupta ruling for post-2014 applicability.

It also pointed that, in March 2025, the Supreme Court rejected a review plea in the Powergrid Retired Employees' Association case, thereby upholding the Sunil Kumar B. judgment.

The Court rejected the EPFO's argument that employees who retired before 1st September 2014 are not entitled to higher pension benefits under the Sunil Kumar B. judgment.

It held that such disentitlement only applies if there is clear evidence. The Court emphasized that for an employee to be disqualified from pension benefits under the Sunil Kumar B. judgment, two conditions must be clearly proven: (1) the employee superannuated before 01.09.2014, and (2) voluntarily exited from the pension fund without exercising the joint option under para 11(3) of the pre-amended EPS, 1995.

These two elements are interconnected and must be established by the employer with clear evidence. Furthermore, the Court noted there is no dispute regarding the petitioners' valid membership in the pension fund, and any claim that they were not members would need to be assessed under Section 26A of the EPF Scheme, 1952.

Title: EMPLOYEES PROVIDENT FUND PENSIONERS WELFARE ASSOCIATION Vs UNION OF INDIA AND ORS

Click here to read/download the order