EPFO higher pension: Punjab and Haryana HC’s pro-rata verdict brings relief to pensioners

New Delhi: The Punjab and Haryana High Court's verdict quashing the pro-rata method, which effectively undermines higher PF pensions, offers a beacon of hope for pensioners in ongoing legal battles across various states, including Kerala. In the Kerala High Court alone, there are around 600 pending cases related to higher pensions.

The pro-rata calculation was introduced through a 2014 amendment to the Employees' Pension Scheme (EPS) of 1995. The primary objective of this amendment was to raise the maximum pensionable salary ceiling from ₹6,500 to ₹15,000.

However, the High Court's single bench clarified that for individuals who contributed based on their actual salaries—regardless of these caps—the pro-rata method cannot be used to split their service into pre- and post-2014 periods. The court explicitly noted that the pro-rata method is inapplicable when there is no upper salary limit.

Pension amounts are legally meant to be determined based on the average salary of the final 60 months of service. Instead, by treating service periods before and after September 1, 2014 as two separate blocks, pensions were significantly reduced. Pensioners argue that this practice violates both the Supreme Court's rulings and the core tenets of the Employees' Pension Scheme, prompting multiple lawsuits across various high courts.

Last year, a single bench of the Himachal Pradesh High Court similarly ruled that the pro-rata method was unjust. However, that decision was subsequently stayed by a division bench following an appeal by the EPFO.

The EPFO remains firm in its stance to robustly defend the pro-rata system in court. Consequently, it is highly anticipated that the EPFO will immediately move to secure a stay against this latest judgment from the Punjab and Haryana High Court.