EPS Higher Pension: Allahabad HC gives relief to HAL retirees in EPFO dispute

The Allahabad High Court has ruled in favour of employees seeking higher pension benefits under the Employees’ Pension Scheme (EPS), a decision that could strengthen the case of thousands of pensioners engaged in similar disputes with the Employees’ Provident Fund Organisation (EPFO).

The Lucknow bench of the High Court cleared the way for enhanced pension benefits for retired employees of Hindustan Aeronautics Limited (HAL), holding that statutory pension rights cannot be curtailed through internal trust rules imposing salary ceilings.

The judgment is being viewed as a significant development in the ongoing litigation surrounding the EPS higher pension issue after the Supreme Court’s landmark 2022 ruling.

What did the court say?

Justice Shree Prakash Singh, while deciding a batch of petitions, quashed EPFO orders rejecting the employees’ joint option forms for higher pension.

The court observed that where both employer and employee had contributed to the pension fund on actual salary, retirees would be entitled to pension benefits based on those higher salary contributions.

The ruling specifically rejected EPFO’s contention that pensionable salary should remain capped at Rs 6,500 under HAL Trust Rules.

The court held that provisions under trust rules which are less beneficial than the statutory Employees’ Pension Scheme, 1995, cannot override rights available to employees under the law.

The High Court also directed the Regional Provident Fund Commissioner to reconsider the employees’ applications afresh in accordance with Supreme Court rulings and observations made in the judgment.

The order was delivered on May 8 after judgment had been reserved in February.

Why the case is important

The dispute relates to the “higher pension” option under EPS, under which employees who contributed to EPF on actual salary instead of the statutory wage ceiling seek pension benefits calculated on that higher salary base.

For years, several EPFO offices and employers either denied or restricted such benefits, resulting in large-scale litigation across the country.

In November 2022, the Supreme Court upheld the validity of higher pension provisions under EPS and permitted eligible employees to submit joint options with employers.

However, implementation has remained uneven, with many retirees alleging delays, procedural hurdles and rejection of applications.

The Allahabad High Court ruling reinforces the argument that once contributions have already been made on actual salary, pension benefits cannot later be restricted using internal administrative or trust rules.

HAL’s stand

A significant aspect of the case was HAL management’s position before the court.

According to PTI, HAL informed the court that it had no objection to granting higher pension benefits and confirmed that contributions on actual salary had already been deducted from employees.

This weakened EPFO’s argument that higher pension benefits could not be granted due to trust rule limitations.

The petitioners argued that although HAL is an exempted establishment, the Employees’ Pension Scheme, 1995, continues to apply to it fully.

They also contended that both employer and employee had contributed 8.33% on actual salary, making them eligible for higher pension benefits.

What does it mean for EPFO pensioners

While the judgment directly applies to the petitioners in the HAL matter, legal experts believe it could influence similar disputes pending before courts and EPFO authorities.

The ruling may particularly support retirees from exempted establishments, employees whose EPF contributions were made on actual salary, and pensioners whose joint option applications were rejected citing salary ceilings.

However, eligibility for higher pension will still depend on individual contribution records, employer verification and compliance with EPS provisions.

(With PTI inputs)