Higher EPS 95 Pension: Employer Cannot Make Retrospective Contributions Above Limit, Rules Kerala High Court

As per Economic Times report, The Kerala High Court has clarified that employers cannot opt to pay retrospective contributions above the statutory ceiling to the Employees' Pension Scheme (EPS).  

This judgement impacts retired employees seeking higher pensions by making retrospective payments for the differential contributions. 

Kerala HC Rejects Retrospective Higher EPS Contributions 

The court has ruled that 67 retired employees of Cochin International Airport Limited (CIAL) are ineligible for a higher pension since their employer cannot retrospectively contribute beyond the prescribed wage ceiling.  

The decision came even though CIAL deposited ₹78.14 lakh, comprising ₹13.24 lakh as employer’s share and ₹65 lakh as interest for the shortfall between 1995 and 2003. 

This ruling reinforces the requirement that contributions to EPS must adhere to the statutory limits during the employee’s service, and any retrospective change is not permitted under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. 

Key Factors Behind the Court's Decision 

The decision was based on multiple grounds: (a) No joint option was exercised by employees and employer under para 26.6 of the EPF Scheme. (b) The employees had already retired and were no longer classified as “employees”. (c) They accepted previous pension benefits without protest. (d) The EPF Act does not allow retrospective payments as the fund is managed on an actuarial basis. (e) No deficiency was determined as per Section 7A of the Act before the employer’s payment. 

Importance of Joint Declarations and Timely Action 

Para 26.6 clearly requires a joint request and written undertaking from the employer for contributing above the wage ceiling.  

The absence of such a joint option or timely contribution invalidated the retired employees’ claim for higher pension, as ruled by the division bench on July 21, 2025. 

Read More: Why EPS-95 Minimum Pension Hike to ₹7,500 Is Still Delayed: Government Explains! 

EPFO's Stand on Financial Sustainability 

The court upheld EPFO's contention that accepting retrospective contributions would unsettle the fund's actuarial balance.  

Since the fund never received these contributions on actual wages during employment, accepting them now would affect financial sustainability and imply payouts without corresponding past investments. 

Conclusion 

The Kerala High Court has confirmed that retrospective contributions above the statutory limit for EPS are not legally valid. Employers and employees must exercise the joint option during service to qualify for higher pensions based on actual wages. 

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