EPS-95 pension: Bombay High Court rules in favour of private sector employees seeking pension on higher wages
Private sector employees seeking a higher pension under the Employees’ Pension Scheme (EPS), 1995, have received relief from the Bombay High Court.
The court has ruled that the Employees’ Provident Fund Organisation (EPFO) cannot reject an employee’s application for a higher pension merely because the employer’s provident fund (PF) trust rules cap contributions at the statutory wage ceiling or do not expressly allow higher pension contributions.
In its October 19, 2026, judgment, Justice Sandeep V. Marne set aside EPFO orders rejecting applications filed by over 40 private-sector employees of establishments including Abbott India, Tata Communications, Raymond Steel and BEST Undertaking.
The court directed EPFO to process and allow the petitioners’ joint-option applications within eight weeks.
Employees and employers make contributions towards the employee’s provident fund, while a portion of the employer’s contribution is ordinarily diverted to the EPS, subject to the scheme’s rules.
The statutory wage ceiling is the salary limit used to calculate contributions under the applicable rules. The EPS ceiling was raised to ₹15,000 a month in 2014 (further raised to ₹25,000 from 17 September 2026).
However, eligible employees who had contributed to their PF on actual salaries above the statutory ceiling can seek a higher pension by opting to calculate pension contributions on higher wages, subject to the scheme’s conditions.
This is where the joint option comes in. It is an option exercised jointly by the employee and employer to seek pension based on higher wages instead of being restricted to the statutory ceiling.
“The common issue of law which is involved in these Petitions is whether private trust rules of a provident fund trust of an exempted establishment under the Employees’ Provided Fund and Miscellaneous Provisions Act, 1952 (EPF Act) can govern the contribution to the Employees’ Pension Fund of employers or restrict the exercise of Joint Option under paragraph 11(3) /11 (4) of Employees Pension Scheme,1995 (EPS, 1995),” according to the ruling document.
For example, if an employee’s salary was ₹40,000 a month and PF contributions were made on that actual salary, the employee may seek a higher pension based on higher wages, subject to eligibility and the required contributions.
Some employers had their own PF trusts because their establishments were exempted from the usual EPF arrangement. The trusts’ internal rules restricted contributions to the statutory wage ceiling or did not expressly provide for higher pension contributions.
EPFO relied on these rules to reject the employees’ joint-option applications. In some cases, it also cited missing documents or questions about contributions on eligible salary components.
The employees challenged these decisions, arguing that internal PF trust rules could not override the statutory EPS provisions.
Justice Sandeep V. Marne noted that “I have heard Mr. Surana, the learned counsel appearing for the Petitioners, who submits that the issue is conclusively answered by the judgment of the Apex Court in Sunil Kumar B. (supra), which holds that an exempted and unexempted establishments stand on par.”
“He submits that the Trust Rules operate only in the field of provident fund and that the same has no bearing on employee’s entitlement for pension on higher wages.”
“Per contra, Ms. Gandhi, the learned counsel appearing for the Respondent-EPFO submits that the Applications of the Petitioners are rightly rejected by the Competent Authority after duly applying its mind to the entire material on record,” Marne added.
Several High Courts had ruled that PF trust rules could not, by themselves, be used to deny eligible employees the benefit of a higher pension under the EPS. The Bombay High Court held that the rules governing an employer’s PF trust could not be used as the sole ground to reject an otherwise eligible employee’s joint option.
Marne said, “In my view, therefore all the Petitions deserve to be allowed. As consistently held by various High Courts, the rules/deeds of provident fund trusts of an exempted establishment operate only in respect of the provident fund, unless an exemption under Section 17(1)(c) of the EPF Act read with paragraph 39 of the EPS, 1995, including joint option, applies to the employees in same manner as the employees of unexempted establishments.”
“A joint option cannot be rejected on the ground that the Trust Rules either envisage a cap /ceiling or employer’s contribution or that Trust Rules did not provide for joint option on higher pension on the ground that employer did not remit pension contribution on the wages exceeding the ceiling,” he added.
The court also addressed cases where employers could not produce old records. Referring to earlier judgments, it noted that alternative verification methods, including giving employees an opportunity to be heard, should be considered where records are unavailable.
The EPFO had also argued that contributions on certain salary components needed verification. However, the court found no reason to distinguish the Tata Communications case on the grounds presented, as the central reason for rejection remained the restrictions in the trust rules.
The court set aside the EPFO orders rejecting the applications and directed the authorities to process and allow the petitioners’ joint options for higher pension within eight weeks. The petitions were allowed, with no order as to costs.
“Impugned orders passed by the EPFO rejecting applications filed by the Petitioners for availing benefit of pension on higher wages under paragraph 11(3) /11(4) of the Employees’ Pension Scheme, 1995 are set aside,” according to the ruling.
The court considered the Supreme Court’s ruling in EPFO v. Sunil Kumar B., which upheld the 2014 EPS amendments. The Supreme Court had also held that employees who contributed to the PF on actual wages exceeding the statutory ceiling could not be debarred from exercising the higher-pension option solely on that ground, subject to the scheme’s conditions.
No. The judgment does not automatically entitle every EPFO member to a higher pension. Employees must meet the applicable eligibility conditions, and the required contributions and other relevant requirements still matter.
The ruling clarifies that an employer’s PF trust rules, by themselves, cannot be used to deny an otherwise eligible employee access to the statutory higher-pension option.
Sheetal Goel is a Content Producer at Livemint, where she covers corporate developments, personal finance, business trends, markets, and SEBI-related updates. She focuses on simplifying complex financial concepts and presenting them in a clear, reader-friendly manner, thereby helping audiences better understand investment trends, personal finance, and market developments. Her writing focuses on making finance more accessible to everyday readers while maintaining clarity, accuracy, and relevance. <br><br> She holds a degree in Economics (Hons.) along with an MBA in Finance, which has helped her develop a strong foundation in financial analysis, market understanding, and business reporting. Before joining journalism, she worked with finance and broking firms, where she closely followed market developments, investment strategies, and evolving industry trends. This practical exposure strengthened her understanding of financial markets. She has also written content across multiple formats and platforms, including YouTube, LinkedIn, and Instagram. <br><br> Over time, she has developed expertise in covering market-linked stories, investor-focused topics, and regulatory updates in a simplified yet informative style. She also enjoys reading and listening to Hindi poetry, reflecting her appreciation for literature and creative expression beyond the world of markets and numbers.
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