In a significant ruling, the Supreme Court of India, on Friday held that, the provisions contained in the notification no. G.S.R. 609(E) dated 22nd August 2014 are legal and valid; in addition to allowing the employees to pay 8.33% of the salary drawn, instead of 8.33% of Rs. 15,000/- (Rs. 1250/-) as earlier capped in the amendment.
The notification of 2014 amending the statutory pension scheme to contributory pension scheme had resulted in agitations from the employees. The Kerala, Rajasthan and Delhi High Courts also had delivered various judgements in this regard in favour of the employees.
A major flaw in the new scheme, as pointed out by the employees, was that it capped the maximum contribution limit at Rs. 1250/-. The implication being, even if you draw Lakhs of rupees as monthly salary, the pension received after retirement would be very low in comparison as the contribution is capped. The Apex Court, acknowledged the matter and said rightly that, the 8.33% of the total salary drawn may be contributed to the pension funds, resulting in a better pension on par with the salary upon retirement.
For those who retired on or before 1st September 2014, no benefit can be derived from this ruling as they are not part of the contributory pension scheme. The benefit of this judgement is available to those who joined the service before amendment and retired after amendment and those who joined service before 1st September 2014 and is still in service.
The time limit for choosing the amended contribution under the amendment has been further extended by 4 months, in favour of the employees.
The 12-month service period for calculation of pension revised to 60 months in the amendment, which was contested against by the employees, has been affirmed by the Supreme Court Division Bench of Chief Justice UU Lalit, Justice Aniruddha Bose and Justice Sudhanshu Dhulia.
The contribution of 1.16%, levied from the employees as operating fees apart from the contribution of 8.33% was held to be against the employees and struck down. However, this part of the judgement shall not come into operation for the next six months, during which alternate sources of funding may be seeked by the administration.
Additionally, the benefit of 2014 amendments were also made available to the employees of exempted trusts that handled their own pension funds.
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