Retirement fund body EPFO will not allow higher contribution towards pension scheme in fresh cases for time being as it causes additional financial burden on the Employees' Pension Scheme 1995 (EPS-95).
"..contribution to EPS-95 on higher wages would not be allowed and shall be limited to wage ceiling (Rs 6,500)," an EPFO office order for the field staff said.
Employees' Provident Fund Organisation (EPFO) has been allowing members to contribute more than mandatory amount towards their pension account.
According to EPFO order, employers henceforth will be granted permission in fresh cases to contribute higher amount as "every option for contribution on higher wages is putting the pension fund under strain on account of the higher payout obligation."
As per the EPS-95 and Employees Provident Fund Scheme 1952, the maximum basic wage ceiling including basic pay and dearness allowance, for the purpose of provident fund and pension contribution is Rs 6,500 per month.
Therefore, the maximum amount of Rs 541 per month can be contributed to a member's pension account. Those members who get more than Rs 6,500 as basic wages, are required to seek permission for higher contributions to his or her pension account.
The scheme provides that employers contribute 12 per cent of basic wages toward these social security scheme. Out of the employers share 8.33 per cent of basic wages goes to pension account of worker. Thus, the maximum contribution to a worker's pension fund could be Rs 541 per month and payment of any amount higher than this requires permission of EPFO