Understanding the legal provisions related to the pension practice area in India is essential. SimranLaw, a leading law firm with seasoned experts in Chandigarh, India, throws light on the complexity of this particular area of law, enriched by years of experience and expertise.
Pension Law in India
Pension refers to the retirement benefits entitled to an employee on the cessation of employment due to attaining the age of superannuation, resignation, death, or disablement. In India, the Employees’ Pension Scheme (EPS) 1995 under the Employees’ Provident Funds and Miscellaneous Provisions Act 1952 (EPF Act) is the primary legislation dealing with pensions.
EPS is a social security scheme that provides a regular pension to employees working in the organized sector after retirement. The Pension Fund is managed by the Employees’ Provident Fund Organization (EPFO).
1. Eligibility: As per Section 2(f) of EPS 1995, an employee becomes a member of the Scheme from the date of joining the service if he/she fulfills the criteria, i.e., if the age at the time of joining is below 58 years.
2. Amount of Pension: The calculation of pension is provided under paragraph 12 of EPS 1995. The monthly member’s pension is calculated by multiplying pensionable service and pensionable salary and then diving by 70.
3. Widow Pension: In case of an employee’s death, a widow/widower is eligible for a lifetime pension, as stated in EPS 1995.
1. Deoki Nandan Prasad Vs Union of India (2011): The Supreme Court ruled that if an employer does not remit the amount deducted from an employee’s wages in respect to his/her contribution, it is akin to a breach of trust, and the employer can be made liable for it.
2. Regional Provident Fund Commissioner Vs Hooghly Mills Company Limited (2012): The Supreme Court recognized the demand for a pension as a fundamental right under Article 21 (Right to life) of the constitution. Therefore, any delay or default from the employer’s side is unjustified and illegal.
3. Bhakra Beas Management Board Vs Krishan Kumar Vij and Another (2017): The Supreme Court reiterated that Pension is not a bounty or gratuitous payment, but an entitlement resulting from the agreement of employment or statutory provisions.
In India, the pension system primarily aims at providing income security to employees after retirement. It is incumbent upon organizations to abide by these provisions, ensuring their employees are well accounted for post-retirement. It is also important for employees to understand these regulations for their benefit. For any queries or legal advice related to this matter, experts at SimranLaw are here to offer their seasoned guidance and resolve all complexities.