EPFO Pension Fiasco: An Example How Bad Governance Alienate People from Government in India!

There are now millions of people in India like me who feel that the Employees' Provident Fund Organization (EPFO) coming under the administrative jurisdiction of the Ministry of Labor and Employment of India, has degraded itself to such an extent that it is better considered as a typical case of bad governance in India.

If this organization is any yardstick, it is not at all difficult to find that India as a nation has miserably failed to deliver good governance.

Governance in India had been apparently so lethargic in the past several years. It gave a golden opportunity to Shri Narendra Modi to make fervent appeals to the people of India to vote for a change to bring good governance in India.

The people fed up of insensitive bad governance, earnestly wishing dynamic good governance, responded positively. Shri Narendra Modi became the Prime Minister of India a couple of years ago. In about a year he will be completing his five year term as the PM of India. Most likely he would again approach the people with the same slogan of good governance!

But what happened in the past four years? Did he command to bring about good governance?

The answer is debatable. Some say yes, while several feel the other way. 

Whatever those be, I personally feel that he had missed a golden opportunity to act positively and gain the goodwill of millions of retired and working employees of India. He could have easily accomplished that by simply acting decisively in just one case which is now known as the EPFO Pension Fiasco of India. (Click this hyperlink to read the blog article to know more about it)

It was all about bringing reasonable social security to millions of working class people of India who are not beneficiaries of government pensions. It was all about implementing a scheme in the letter and spirit of a statute made by the central government some years ago. It was all about removing certain administrative misdeeds created by the government officialdom. It was an opportunity to bring about solace to millions of retired people by way of getting them their due pensions from the funds that they and their employers contributed over the years. It was nothing complicated or anything that the government could not do. It even had a Supreme Court directive to the government to act!

But unfortunately the EPFO controlled by the government of India acted in the most unexpected manner. They forgot that they are an organisation for social welfare and they are required to act for the benefit of the people covered by the scheme and not against them.

The acts done by EPFO in recent years have been most shameful and undesirable. It acted to divide the people and create enormous confusions and complications that none could ever get any justified pension benefits from it in their life time! The government of India in turn failed to intervene and resolve the complications created by its officials. The political superiors simply bent their knees before the powerful officials and in turn became supporters of the latter. They deviated from the principles of good governance and became sheepishly party to bad governance.

The issue was brought to the notice of the government of India several times from different quarters and the issue got debated in the parliament several times. Conflicting news pervaded the media from time to time making the EPFO-pensioners rejoice and weep at the same time.

Yet the government did not act to bring justice to the retired people who earnestly waited and  hoped to get  justice. They thought their once beloved PM and proponent of good governance- Narendra Modi-  would make a decisive intervention.

Unfortunately for them nothing of that sort happened.

They cursed their fate. They cursed themselves for believing good governance would come as promised.

It was nothing complicated or impossible. It was simply a matter of removing certain elements of official misdeeds and bringing administration in the right tracks. It this couldn't be done, what better we can expect from a government?

Do you know why the millions of pensioners covered under EPFO pension feel cheated by the government?

By certain acts of the parliament of India, the EPFO pension scheme got introduced way back in 1995. The act required that the employers (mostly companies in the public sector and private sector in India) contribute some amount every month, equivalent to a small percentage of the concerned employees' monthly salary to form a superannuation pension fund which would be used to provide post retirement monthly pension to the concerned employee. The EPFO was legally entrusted to act as the apex fund and pension management organization. As a mark of social commitment the central government also committed to make a nominal amount with respect of every employee.

The EPFO pension scheme, was a contributory pension scheme.

For nearly 20 years the EPFO was in the process of raising the funds. During this time it hardly paid any pension to anyone. How they did the fund raising in itself was a matter debatable. It was quite arbitrary with the active administrative support of the government from time to time. Neither the employees, nor the employers were informed of the details of the scheme. Employees and employers too were treated differently by arbitrary and unjustified administrative decisions.

An employee became eligible for getting the EPFO pension once they attain the age of 58 as per the EPFO rules. The formula for payment of pension due was made by the EPFO and was never told to the employees nor the employers during the initial 20 years.

The epfo-pension being a contributory pension is an amount that should be proportional to a persons salary and length of service. It is worked out on the basis of EPFO's capacity to pay from the funds so generated. There is no dispute on this.

Based on EPFO's calculations, a person who served more than 20 years and drawn a monthly average salary of Rs.50,000/- at the time of retirement should get a monthly pension of about Rs.12,000/- ( for clarity, I am not going to the details of actual calculations!) The pension should be lower or higher for others with lower or higher actual salaries and length of services.

But due to their own administrative goof up, the EPFO could not collect monthly contributions from several organizations to the extent as payable by the employees' actual salaries. They had set an arbitrary ceiling for the salaries of all employees from time to time starting from Rs.5000/- to the now set limit of something around Rs.15000/-

There is no logic for this. If the scheme is purely contributory, why at all there should be some arbitrary ceiling like this?

Even if it had been done earlier by some reason, what is the harm in asking the concerned employee who wish to avail the pension as per his actual salary to refund the actual payable monthly contribution with all interests? Take that and pay the employee the due pension as per the actual salary? Quite reasonable, isn't it?

Any organisation who thought of their foremost objective of social security would have agreed and did that without any hesitation.

But India's EPFO officialdom refused to do it that way. Remember, they are not covered under this pension scheme. They are the people who take hefty pensions from government's budgetary support. If government does not pay for them, they find the funds from the employees' pension fund they manage!

Remember, a government employee drawing a monthly salary of Rs.50,000/- per month gets a pension of over Rs. 25,000/- initially and the same keep on increasing every year till their death. On the other hand, the EPFO contributory pension payable on actual salary of Rs. 50,000/- per month is only about Rs.12,000/- per month (fixed). And what they now pay is only a maximum of about Rs.2400/- per month (fixed) regardless of what salary the person had at the time of retirement!

This has caused several retired employees to approach the courts in India and finally the Supreme Court of India understood the logic and instructed the EPFO to pay the pensions as per actual salaries. The EPFO is allowed to collect the due contributions in lump sum too.

No doubt the actual calculations for those retired employees in the last couple of years is quite tedious. Yet it is not anything impossible.

For example, as per the EPFO rule, I became an EPFO pensioner in 2014. If EPFO had to pay me pension as per my actual salary, I had to refund about Rs.15,00,000/- and I would become eligible for getting a pension of about Rs.33000/- per month from 2014. Since I got only a pension of about 2300/- per month so far, my pension arrears would be something a bit more than the amount I have to refund (this is just an approximation for clarity)

That simply means, the EPFO can do the calculation adjustments and pay the amounts right away, if they want to help the retirees in their old age.

But the EPFO officialdom does not think it that way. They do not believe in good governance. They do not like to go as per the Supreme Court of India directive.

What they did subsequently was more disgusting and disappointing to both the retirees and those still in employment.

And they dragged the government of India too in their disgraceful acts and set an example to show how to spoil good governance in India.

Now thousands of retired employees have moved the courts and a big fiasco has taken shape or in the making. 

The EPFO officials on their part are doing all they can do to enhance the confusions and the never ending court cases! Perhaps these officials of the government may be laughing heartily at their clever manipulations to bring such an imbroglio.

And pitifully, the political leadership seems unconcerned or clueless to act. Or they simply lack the will and vision to do anything.

If they cannot implement a simple implementable social security system in a time span of 25 years, what do we expect from the political class of India? 

Is our political luminaries capable of doing anything as they speak when not in power? 

Is the officialdom too powerful to bring our political brass to their knees when the latter is in power?

Or is it yet another case of the so called unholy nexus?

What ever it is, I have lost faith in this country's governmental system. If they cannot even do the simplest of the simple things, what they can do after all?

Health Insurance Policy for Senior Citizens in India:Is it a System to Rob the Hapless?

Is health insurance or the so-called medical insurance service as being provided in India now, a system for providing a justified social security to its policy holders or a system to entice and loot the hapless people in a clandestine manner?

There are several reasons for me to have this doubt in my mind. Perhaps, I am not alone  thinking this way. Anyone who has been genuinely taking medical insurance until he or she came across the misfortune of claiming the insured amount from the insurers would likely have this doubt.

Those who are very concerned of having a genuine medical insurance are the senior citizens or the people who have retired from active service. They are entering the old age phase of life where incomes and health both are in a declining trend. Perhaps they are the ones who need medical insurance the most as a measure of social security. Unfortunately, they are the least preferred by the very same medical insurance companies who have been allowed to enter in to this very 'restrictive' or 'statutorily controlled' insurance service business in the guise of covering an important aspect of social security.

The words 'restrictive' and 'statutorily controlled' are very important to be noted. The Indian political leadership across all political mindsets had been against the private players entering in to the insurance business of all types for several decades ever since India got independence. Hence the Indian government never allowed any private players in this business other than the Life Insurance Corporation and the General Insurance Corporation, the two public sector mammoths fully controlled by the government of India for almost half a century.

Why didn't they allow the private players when there existed several private insurance companies in the developed nations? None gave any fully justified answer for this. The explanation was that the Indian politicians are of the socialistic mindset deriving their political learning from the teachings of communism and socialism and capitalism was a political taboo.

But with the fall and split of the communist bloc nations led by the erstwhile USSR, we had seen a worldwide reversal of political thinking that resulted in making the hardcore communists to become apostles of capitalism and free market economy.

India had been a safe player always and therefore it remained that way even after the major changes in international politics and economic shakeups. No doubt it too moved to the capitalistic way but in a manner that confused everyone. It was the great Indian trade and business game for the political and bureaucratic opportunists to make quick personal gains. India adopted the licensed free market economic system while retaining many of the government owned businesses in an objective less manner. The government owned companies have been removed from governmental financial supports and allowed to function independently competing with their private competitors. However, the government did not ensure to give them enough freedom as that was available to their privately owned competitors.

Naturally in India, a peculiar situation arose. It was now an economy with free market objectives where both private players with greater freedom of operations functioned side by side with government owned businesses with several functional restrictions.

The efforts by various governments to come out from the controlling ownership of public sector businesses in reality did not meet any serious objections from any front except some lukewarm protests here and there. Yet, the governments have been doing the privatization process in a very arbitrary manner failing to meet their declared objectives always.

This kind of a situation allowed crony capitalism to take deep roots in the Indian soil. Several private business groups grew many folds and became bigger than several large public sectors of the past.

It has led to the development of governmental favoritism and the era of 'scams' started with corruption and inefficiency synonymous with India and all that is Indian. India ceased to become the ideal democratic nation of truth , non-violence and justice that was originally conceptualized by erstwhile world renowned Indian leaders like Mahatma Gandhi. 

The era of political opportunism with the sole purpose of personal gains began to grow in this land of Mahatma Gandhi. When political leaders became that way, the Indian bureaucracy too began to rot making it a large and complex system of government servants functioning in various styles and purposes in the most unpredictable and inconsistent manner.

Thus India has now become a unique nation in the whole world with a unique style of functioning: the Indian system of arbitrary governance. In this system any or all rules keep changing from time to time and could be interpreted according to the whims and fancies of the so called authorities!

Indian courts too became entangled in this great system of Indian governance that every now and then they kept reversing their own judgments! 

So what was the reason for the Indian politicians to oppose any private players to set up an insurance business? Why was insurance a sector that was still maintained as one with too much political and governmental controls? Is it for safeguarding the public or something else?

In my considered view, the business of insurance is a great money spinner for those who are allowed to do this business. It is like all other controlled businesses like sale of alcoholic beverages, sale of petroleum products, transport business, telecom business, etc.

The government controls in these businesses are mainly kept not only for gaining a huge revenue for the government coffers, but also for making huge ill-earned black moneys for those individuals who happen to be part of the governmental control system.

Such a system is also prone to make huge losses as well. It is like the game of gambling. In India, businesses are now routinely considered a big game of gamble. It is no more a system of doing a good service to the society availing a reasonable profit. It is a system of making landslide profits under the protection or licence of government to such times that it can.

I often wonder and ask to myself: Why do my fellow country men always be so selfish and self centered? Why are they so hesitant to extent any good to their fellow beings?

I have no answer. How can you expect goodness when evil has taken predominance for whatever reasons?

So in short, health insurance in India now is in the hands of evil doers under evil protection. But evil never has a prolonged victory. Its success is short lived.

No business that violate the fundamentals of human service and justice will sustain for long. That is a universal truth.

Evil infested men and women are clever and intelligent. They only lack wisdom! They know that evil systems can not go endlessly. But evil people, inherently are suicidal. Individually they make their lives miserable at some point of time for themselves only to be replaced by others with potential evilness!

Health insurance business, as with all other businesses, can be managed well making a win-win situation for all players, the government, the company investors, the company directors, their employees and their individual clients. There is no question of this business making any unjustifiable loss to any one, provided the business is carried forward in a justifiable and efficient manner without evil objectives.

Once they do that, it would be of great help to everyone.

But who will take the lead? Will evil control itself?

Then India would probably does not even need the so-called 'Insurance Regulatory Development Authority' the autocratic system that keeps playing a role with no character or compassion to the people.

One thing must be essentially understood in the business of insurance. Insurance is not taking individuals' money and returning a part of the lump sum at some other time of distress or need.

Insurance works on the principle of collective strength of pooling resources and the universal truth of dilution of individual distress when there are many to share the load.

Insurance companies are for doing the service of resource collection, management and re-distribution. But when they do this management with no competency and honesty then they degrade as looters and not any social security service providers. When that happens their business too would become non sustainable!

Will they ever realize this?

Health insurance is no exception. In reality all insurance business in India as of now are means of making profits for the licensed insurance companies. Vehicle insurance is a typical case. Its premiums are sky-rocketing in India every year to such an extent that people are no more interested in taking comprehensive vehicle insurance except those forced upon them by the government.

When insurance business was a state controlled one, there were only the Life Insurance Corporation and the General Insurance Corporation in India in this field. In those days, these companies owned by the government did very good service through their agents for collecting the premiums and providing the insurance documents to the people. Their premiums used to be affordable. But their 'after-sales-services' used to be extremely poor. They seldom paid the insured sums during the times of need, without harassing the insured or their heirs. This has caused these state corporations accumulating huge funds. They too tried greedily to make money but never realized the purpose of insurance-helping people while in distress!

The entry of private players were allowed to bring competition in insurance services and to curtail the public sector monopoly.

But these private companies too, unfortunately forgot their essential objective of doing affordable insurance service. No doubt, competition in insurance business enhanced. However, that competition has been during the time of collection of premium and not for the time of providing the monetary support at the time of needs.

Now all insurance companies in India, both in the public and private domains, keep doing all they can to fool the public and make as much money they can from the gullible public. The unfair practices they adopt has caused huge rise in unfair claims and consequently the insurance sector has degraded to an arena of unfair business.

When it has degraded to an unfair business area, the government brought in the Insurance Regulatory and Development Authority which in turn has done more damage than any correction.

Unfair business practices are on the rise in this country. Corruption is now accepted as a way of life. 

When will we realize our follies? When will be able to eradicate our greed arising out of fear of the unknown?

Only then we can expect a society where businesses like insurance doing a helping hand to the people at large while they carry out their services without making losses.

EPFO Pension Fiasco: The Real Story !

If you are a concerned person with some background information, you may directly go to my earlier blog article titled: EPFO of India- How An Indian Statutory Welfare Organization Functions!

But there are millions in this country who are pretty well unaware of EPFO. The pity is that even the so-called contributing members of this organization are also not very well informed.

I have been requested by a few to write a simplified article about the struggle of thousands of people centered around this central government organisation, in the present times.

Employees' Provident Fund Organisation (EPFO) is a statutory organisation of the Government of India which is under the control of the Labour Ministry.

One can know the official version of the functions and the details of this organisation by visiting the EPFO Official Website.

It's essential function is to provide post retirement income to the work force of  both private and public sector in India by a collaborative process of financial management.

The EPFO is set up under the statutory provisions of the EPFO Act enacted way back in 1952 and amended several times later, the latest being in 2017. The organisation is also called the Provident Fund Organisation.

By the provisions of this act, all employees coming under the purview of this act in India are required to make some monthly contributions towards their Provident Fund, a fund that would be returned back when the employee retires from active service life, together with the interests and incomes accrued.

Towards the fund, both the employee and the employer are required to contribute almost equally. How much they need to contribute was stipulated by the government by way of amendments of the EPFO Act or its Rules and Regulations from time to time.

The contributions to the fund thus varied from 8.33% to 12% of the basic salary and dearness allowance. Suppose an employee had a basic pay of Rs. 1000/- and a DA of Rs.500/- per month, approximately Rs.150/- was deducted from the employee's monthly salary and sent to his provident fund. An equal amount was required to be paid by the employer as well.

The money so collected went directly to the government account held by the EPFO. It was EPFO's responsibility to invest these funds wisely and gain a return well over the bank interest rates. Of course, the government of India ensured the growth of the fund by suitable direct or indirect interventions from time to time.

While the employees governed by the PF Act got their accumulated PF fund at the time of superannuation, direct government employees governed by the pension act got monthly pensions after retirement direct from the governments' budgetary provisions for salaries and pensions. Such employees too contributed towards PF fund. However, they did not have the employer's equal contribution.

Imagine the amount of contribution which went to the EPFO's account every year! How much it is a matter that is not disclosed easily to the contributing employees or the various employers. Besides, employers not making contributions in time are penalized according to the provisions of the PF law.

Since very large sums were to be invested by the EPFO, they exempted some large companies from remitting the monthly PF collections to the EPFO. Instead some companies were allowed to set up independent Provident Fund Trusts under the general superintendence of the EPFO which were allowed to do the investment management of the funds. Such companies were later called the so-called 'Exempted Organisations'. Consequently, those smaller companies who transmitted the funds directly to EPFO were known as 'Non-exempted Organizations'.

Exempted organisations did not have full autonomy in investment decisions as well as fund repayments. That had to be based on the government directives. Even the profit or interest payable on any year was determined by the government, directly or indirectly. 

Before the 1990's the bank interest rates were to the tune of 10-12% or even more. Thus a lump sum CPF retirement accumulation of Rs.25 lakhs, could easily fetch a monthly interest income of Rs.25000/- which was some thing better than the pension income of the pensionable employees. Thus there was not much grievance from the employees covered under the non-pensionable CPF scheme.

However, some individuals with very low financial management acumen often made big follies in handling the good retirement corpus they received as CPF accumulation. They were left with no survival income after a few years of their retirements. Since India joining the liberalization band wagon, the bank interest rates were on a declining trend.

This forced the government to make an amendment in the PF statutes which envisaged a small portion of the employer's contribution to be set aside separately for making monthly pensions, instead of lump sum payment. This amount was payable directly to the EPFO by both exempted and non-exempted organisations.

The amount to be transferred this way amounted to about 8.33-12% of the employees' basic pay and DA as contributed by the employers. However, the government arbitrarily fixed the maximum monthly salary deemed for any employee at Rs.5000/- way back in the 1990's which they periodically enhanced to Rs.15000/-  in the recent times.

Never during the time when the government introduced this change, it did not give any clarifications to the employees nor the employers about the manner in which the pension would be calculated nor the manner in which it would be paid.

Neither the government made any reasons for the arbitrary fixation of a ceiling to the individuals' actual salary for the purpose of pension contribution.

The government appeared to be not so serious in giving the employees' any real benefits. It appeared to every one that the government had actually tried to grab their hard earned savings in the PF.

Editorial in Malayala Manorama (14-12-2017)
News Paper Highlighting the Irresponsible Attitude of EPFO
(Click the image above to download it) 

I was a member to this scheme right from its inception way back in the 1995. Though my actual basic salary and dearness allowance was well above, Rs.5000/- during those days, about Rs. 450/- every month got deducted from my employer's contribution to be sent to the CPFO. My employer being a large central PSU, the Steel Authority of India Limited (SAIL) was an exempted organization because it had been allowed to set up various trusts in various states to manage the CPF funds. To be frank, we have never heard this term Exempted or Non-exempted during our service period any time!

Most employees had no feed back on how this EPFO or the PF trusts functioned during those days. All felt it was some government function for the benefit of all.

My company routinely issued statements of CPF accumulations and also the mandatory deductions towards the so-called PF-pension. However, we never knew how much would be our pensions nor the formula for working out this pension.

Earlier to that there used to be a monthly salary deduction towards what is then known as the family pension scheme (FPS). It never got implemented even after decades of money deductions. This too was a government initiative.

To be very fair, the government of India had such schemes floated with no seriousness of actually implementing it. Indians, have learned from decades of experience that their governmental system is not for any real benefit to the people, but only provided lip service by inefficient democratic functionaries! They also knew that the bureaucrats had gained their legacy from their colonial masters and they were not very comfortable to provide any thing that really benefited the people. Both the bureaucracy and the politico-cracy were reluctant to work for the benefit of the people. They were great practitioners of self aggrandizement!

The so-called EPFO pension or PF-pension got to some serious pension payment only a couple of years ago. Regardless of the persons actual retirement age, EPFO considered retirement at the age of 58. This fallacy is due to the government attitude of amending various laws without proper home works!

The EPFO seemingly never maintained any proper records of the money they collected towards the PF pension from the individual organizations towards the concerned employees. Though they are a central organization, they maintained their accounts state-wise with responsibilities distributed to a government official called the Regional Provident Fund Commissioner. There is only one office in every major state which is normally located in some location in the state capital city. For those who are not staying in the state capitals, it is really a great punishment to locate this regional PF office and get their PF related problem fixed.

Efforts for computerized management of accounts with Universal Account Number (UAN) for every contributing employee member has been implemented only in the recent years. Even now the system is not very transparent! The system still is in its infancy state and it is not very easy to transact through their computer system or know any information that the members might require. The members also cannot put up their applications or file complaints through the website, though they claim it as possible.

Similar to many like me I got retired from my company in 2016. As my company had operating centers in several states, I had to work in a couple of such centers during my career. Though, my company deducted the statutory PF pension contribution for me to the EPFO, the amounts remained within the concerned state regional PF office account, never to be joined against my UAN. The EPFO never attempted to do it of their own. During my retirement time, I remember the pains I had taken to approach these offices and the company's PF coordinators for getting this done and to get my pension (though pea-nuts) paid. Though I had an actual retirement time basic plus DA salary of over Rs.150,000/- the PF-pension for me with the arbitrary government decided ceiling was coming only about Rs.2000/- per month. On the other hand, a direct pensionable government employee was able to draw his PF in lump sum plus a monthly pension of Rs. 75,000/- which was to grow every year till his remaining life time. And the lump sum contributory provident fund that we received was not going to yield any corresponding income when there is no guaranteed returns from any investments on a long period with interest incomes are on a declining trend. Unless you are a financial wizard or your family is financially sound, the employees retired from public sector and private sector are faced with great uncertainties of retired existence!

Here one point is to be made clear. There is absolutely no difference in payment of pension contribution to the EPFO by the organisation whether it is exempted or non-exempted. Exempted or non-exempted is a categorization done by the EPFO officials for their own convenience of accounting for the management of the entire PF funds.

But for the PF-pension contribution, the government asked all to transfer the money to EPFO even for the exempted organizations where authorized PF Trusts have been in service. This perhaps caused many in the exempted organizations to think that the PF pension contribution is a type of government tax and it was being used to augment the government's yearly budget!

A couple of years ago, some employees from some Kerala based organizations learnt the manner in which the EPFO calculated the pension due for each of the contributing employee member. The formula they presented showed a very high pension had there not been the ceiling arbitrarily fixed by the government for the salary!

For example, instead of the Rs.2000/- I would have got about Rs.40000/- per month. Though this is income generated from our own funds with administered returns, this amount would not have grown very high as compared to the conventional pensioners of the government. But surely it guaranteed a better tension free retired life at least for the present times. If we were to make a long term annuity of that level we have to invest over Rs. 50,00,000 ! And there is no provision for future inflation!

With this realization, some retired employees felt that the arbitrary ceiling of salary that the government fixed without the concurrence of the employees must be removed and a higher pension according to actual salary to be given. Several retired employees were ready to refund the lump sum CPF they were paid during retirement.

But to their utter dismay, the EPFO was not in their favor. This government organization which was created for providing and ensuring the retired employees, actually preferred to be non considerate! In my opinion, this unfriendly attitude of this organization is not because of any political directive, but due to bureaucratic attitudes, for which India is conventionally infamous! 

Besides, Indian bureaucrats apparently love people to be drawn to the courts even for such things were things are logical and simple to find solutions and decisions. They know the art of making simple things complicated. Many times, their attitudes and actions even cause their political masters too at the receiving end of higher courts!

Thus EPFO bureaucracy of that time forced the aggrieved retired employees of Kerala and some other states to approach the courts for the justice denied rectified. Initially the courts too were not very considerate due to the wide misrepresentation of various facts.

Finally, the Supreme court of India gave a verdict in favor of the retired employees. It asked the government to pay PF-pension to the members based on actual salary removing the arbitrary ceiling.

The employees and the retirees felt relieved, only to be betrayed by EPFO once again. This time EPFO bureaucrats issued a circular from their side, apparently without the approval of the EPFO board, restricting the Supreme Court judgement in favor of only the employees of the un-exempted organizations only. This was clearly a well calculated movement by the EPFO bureaucrats to make things complicated and get the sadistic pleasure from watching the plight of the helpless retirees.

Unfortunately for India, many bureaucrats are of this nature. They think Indian governance system is their own vested property. Democracy, peoples' right and the constitutional guidelines have no place in their minds. They do things so cleverly or too indifferently that their political masters are left to their mercy. Since they do not really aspire for any final results, they are not often bothered by the way the final decisions move!

This was the time, some people thought of approaching some politicians. Though the PF law is apparently their brain child, the good majority of politicians do not have any real understanding or the thrust to make an effort to understand the problems of the affected people. They normally act, when they feel that it is a good vote bank issue!

The matter was presented with full details and facts by a Member of the Parliament in the central legislative body compelling the government side to make some statements and course of actions. Normally the ruling class try to go against the demands made by any MP if he or she is from the other side. If they act by the genuineness of the matter, it is really something appreciable.

The present government, no doubt, is the one which made some remarkable initiatives with regard to the management of the EPFO.

The present PF-pension issue of removing the arbitrary ceiling of salary for all member employees in accordance with the letter and spirit of the Supreme Court judgement is some thing the government can easily do if they are genuinely interested in the well being of their senior citizens who worked in the factories owned by the government and the private groups in the past.

I hope the present government would act positively in the earliest time possible without falling prey to the bureaucratic objections or misguidance.

The issue is now concerned with all workforce of India because, governmental pensions no more exist now. The existing workforce in private sector, public sector and the government are all benefited by the EPFO working with genuine people concern.

There are agitations initiated by various associations of retired employees to make the issue known to the government and the public.

I earnestly hope the present government would make a difference and a marked action of effective governance in this issue.

Employees' Provident Fund Organization (EPFO) of India: A Typical Example How An Indian Statutory Welfare Organization Functions!

[The story of the plight and fight of non-pensioned industrial employees of India to get the decent monthly pension that is legibly due to them, but denied by the very same governmental organization that was set up to ensure them a financially tension free retired life! Read also: The EPFO Pension Fiasco: The Real Story!]

Employees' Provident Fund Organization (EPFO) is a Central Government Organization established by the Indian Government essentially to ensure a decent post retirement life to the millions of industrial employees of India, both from the private and public sector.

It came into existence due to the evolving thoughts of welfare oriented thoughts of the parliamentarians and the democratic governments of India over the decades. 

There have been essentially three types of workforce in this country:

In the first category are the direct employees of the central and state governments who are part of the governments and the governance system. They got their salaries, perks and post retirement pensions from the income drawn by the government from various kinds of taxes. They have been typically indifferent to the public with an authoritarian attitude regardless of their political masters. It has been this group that drafted the laws, drawn the rules, interpreted and implemented the rules with all possible errors always resulting in much of the complications of democratic governance. Both the public and the politicians have been at the mercy of this lot. Collectively they are known as the bureaucrats or babus.

The second category of employees has been the producers and providers of industrial goods and services working as collectives organized under various establishments and companies set up either by the public or the governments. The first category ruled over them and the former had also ensured that they were inferior to them in some manner. They lacked certain privileges as compared to the first. One was the facility of getting monthly pensions after retirement. But depending upon the organization and the type of work, they enjoyed varying types of superannuation separation benefits, in the form of lump sum retirement benefits. Contributory provident funds (CPF) , gratuity and the like for some of them had been good enough to get good post retirement monthly incomes!

The third category has been the unorganized workers, the self employed and the like in the industrial, agricultural and trading sectors. The majority of them are with actual low incomes. However, there are also a good number who apparently earned a lot by methods that cannot be determined or accounted by any one.

One of the functions of all governments everywhere, though not the first priority always, is to do actions to improve the standard of living of its citizens. This involves ensuring employment and good incomes to all adults not only during their prime life period, but also during their sunset years.

The EPFO in India is as a result of this. It got established and evolved through laws and rules made by the Indian governmental establishment over the years for providing a decent post retirement income to all non-pensioned employees both in the private and the public sector. The provident fund act and subsequent rules enacted and made by the government facilitated this. The EPFO under the Ministry of Labor and Employment of India, managed by central government bureaucrats has been entrusted to ensure this.

The babus who are entrusted to manage the collection, management and distribution of funds are not beneficiaries of the system they manage. Hence, there is the tendency of the EPFO employees developing the master kind attitude over the member beneficiaries of the EPFO system. 

In actuality, this attitude has made the EPFO a slow performer and an organization unfriendly to its own beneficiary members! It has taken decades for the organization to come to some acceptable shape and to execute the welfare functions for which it was established in the first place. The general attitude of this organization collectively over the years have been to formulate ways and rules that ensured the least benefits as possible to its beneficiary members. They intentionally tried to hide rules, regulations and guidelines from the members as far as possible.

Since the general behavior of this organization went generally against many of its contributing members, there had been a volley of court litigation that the aggrieved members had to resort to in the past.  

But the EPFO organization in general had been trying not to follow the court guidelines in letter and spirit. Its officers had been trying to be as adamant as they can in not providing the due benefits to the lakhs of industrial workers who are retired and are going to retire.

It is a typical case of how the Indian bureaucrats execute their vested interests even when their political masters and the judiciary desire the other way!

Is it that the Indian bureaucrats need re-orientation training too often to shed their colonial past and to become citizen friendly?

I do not want to write about the details of the case in which the EPFO is trying hard not to provide due retirement benefits to thousands of retired employees of Indian companies even after various court decisions and directives.

Instead I take the liberty to reproduce the appeal made by the Federation of Retired SAIL Employees to the Minister of Labor and Employment below which is self explanatory to a good deal. Similar appeals have been made by several others as well in the recent past.

The following is the appeal:

To

Shri Santosh Kumar Gangwar,

Hon’ble Union Minister of State,

(Independent Charge),

Ministry of Labour & Employment,

Govt. of India, New Delhi.

Sub.: An appeal for implementation of verdicts of the Hon’ble Apex Court equitably and in its true spirit for the revision of EPS’95 pension to the similarly placed retirees from EPF (not EPS) Exempted establishments

Hon’ble Shram Mantri Santosh Kumar Gangwar Ji,

On behalf of over 1.20 lakh retired employees of SAIL, we welcome you to the new and independent responsibility as Union Minister of Labour & Employment. We hope and believe that you will be taking the Ministry to newer heights of success by resolving all the long pending issues of Labour and Pensioners incl. those of the Pensioners of Exempted Establishments under EPS-95.

We also wish you and your family members a Happy and Prosperous Diwali.   

We, the old aged pensioners (belonging to SAIL, an exempted for Provident Fund by EPFO but not exempted for Employees’ Pension Scheme’95) shall be grateful for sparing a few minutes out of your busy schedule in looking up the following matter for your kind & sympathetic consideration in the interest of justice: 

Background

1)    The Employees’ Pension Scheme, 1995 (EPS’95) is an Employees’ Welfare Scheme introduced by Govt. of India under the provisions of Section 6A of the Employees’ Provident Fund & Misc. Provisions Act, 1952 which is managed and monitored exclusively by the Employees’ Provident Fund Organization (EPFO)  under your Ministry.

2)    When the EPS’ 95 was introduced all the funds of earlier Family Pension Scheme, 1971 were transferred to EPS’ 95 Fund which was notified by the Central Govt. in the Gazette of India: Extraordinary and the scheme came in to force with effect from 16^th November, 1995.

3)    In accordance with the provisions contained in the Act, Provident Fund of “Unexempted establishments”is being managed by the EPFO Trust whereas that of “Exempted establishments”, it is being managed by the “Exempted Trusts” of respective establishments under the total supervision & guidelines of the “EPFO Trust”.

4) But, so far as EPS’95 is concerned; an amount @8.33% out of employer’s contribution was being transferred to EPFO by all the “Exempted” as well as “Un-exempted” establishments but on the wage ceiling of Rs.5000/Rs.6500for payment of pension under EPS’95 to the pensioners of both type of establishments after attaining the age of 58 years on similar pattern.

5)    The exemption granted to the Exempted establishments is for Provident Fund and not for Pension Scheme.  So, there is no differentiation between the “Exempted” and “Un-Exempted” establishments so far as EPS’95 Scheme is concerned.

6)    All the Pensioners of EPS’95 are getting a meager static pension from EPFO ranging between Rs.1000/- and Rs.2500/- only per month.  Recently the pension of everyone had also been revised marginally by EPFO by grantingthe benefit of 2 yrs weightage in pensionable service as per court orders.

Present confusion

7)    On the basis of orders of Supreme Court and various High Courts, the employees of both “Exempted” and“Un-Exempted” categories have been demanding implementation of revised pension on the basis of actual/higher salary instead of on ceiling amount of Rs.5000/- & Rs.6500/- by paying differential amount between the ceiling amount and actual salary along with interest in accordance with the various decisions of the Apex Court/High Courts. 

8)    As a matter of fact, various High Courts and the Supreme Court have held against the restriction of pension on the basis of wage ceiling for pension purpose and EPFO has lost all the 10 SLPs filed by them in the Supreme Court on the issue wherein seven (7) cases were decided together on 31.3.2016 i.e. RPFC Vs A. Mazeed Kunju & others (out of these, 2 SPLs were from Exempted establishments - FACT) whereas one (1) SLP was decided on 12.07.2016 in RPFC Vs Austin Joseph and ors. and two (2) SLPs were decided together on 4.10.2016 in R.C. Gupta & ors. vs Union of India & EPFO  wherein the Apex Court has held that:

10. We do not see how exercise of option under paragraph 26 of the Provident Fund Scheme can be construed to estop the employees from exercising a similar option under paragraph 11(3). If both the employer and the employee opt for deposit against the actual salary and not the ceiling amount, exercise of option under paragraph 26 of the Provident Scheme is inevitable. Exercise of the option under paragraph 26(6) is a necessary precursor to the exercise of option under Clause 11(3). Exercise of such option, therefore, would not foreclose the exercise of a further option under Clause 11(3) of the Pension Scheme unless the circumstances warranting such foreclosure are clearly indicated. 11. The above apart in a situation where the deposit of the employer's share at 12% has been on the actual salary and not the ceiling amount, we do not see how the Provident Fund Commissioner could have been aggrieved to file the L.P.A. before the Division Bench of the High Court. All that the Provident Fund Commissioner is required to do in the case is an adjustment of accounts which in turn would have benefitted some of the employees. At best what the Provident Commissioner could do and which we permit him to do under the present order is to seek a return of all such amounts that the concerned employees may have taken or withdrawn from their Provident Fund Account before granting them the benefit of the proviso to Clause 11(3) of the Pension Scheme. Once such a return is made in whichever cases such return is due, consequential benefits in terms of this order will be granted to the said employees. 12. Consequently and in light of the above, we allow these appeals and set aside the order of the Division Bench of the High Court.

9)    On the recommendations of Pension Implementation & EDLI Committee (PEIC), the matter was referred to the CBT (EPF) in its 215^th meeting held on 19.12.2016 wherein the recommendations of PEIC were approved for all the EPS’95 pensioners as under:

Recommendations of the PEIC of EPFO under the Chairmanship of Dr. V.P.Joy, IAS CPFC, EPFO in its 38th meeting held on 8.12.2016:  Item No. 3: “The agenda item was deliberated at length and the Committee unanimously decided to comply with the orders of the Hon’ble Supreme Court in SLP No. 33032-33033 of 2015 in the matter of Shri R.C.Gupta & others Vs RPFC (Shimla) & Others, in respect of all similar cases to avoid further litigation in this regard. However, it was agreed that compliance may be made immediately in respect of the Provident Fund & Pension Members including superannuated cases whose accounts are maintained by EPFO as their details are already available with EPFO and contribution on higher wages has been received by EPFO. Their pension settlement may be regulated in accordance with the order of the Hon’ble Supreme Court by taking joint option from the employee and the employer and transfer/payment to Pension Fund as per details of payable contributions with interest. In respect of those members of Exempted Provident Fund Trusts whose contribution on higher wages has not been received by EPFO, it was decided that their cases may be examined on verification of books of record of the exempted establishment and the trust regarding compliance to Provident Fund and Pension Fund as per the provisions of the EPF Scheme 1952 and Employees’ Pension Scheme 1995 and the information may be submitted to the committee”.

10)         After the approval by CBT (EPF); the proposal of EPFO dated 10.1.2017 for extending these benefits to all the EPS’95 pensioners was approved by MOL&E and conveyed to EPFO on 16.3.2017 and accordingly, in compliance, EPFO issued a directive to all offices on 23.3.2017 to implement the same i.e. revision of pension after accepting the differential amount w.e.f. 16.11.1995 till the date of retirement along with interest from pensioners for re-fixing their revised pension.

11)        It is also a matter of record that the decision as contained in the directive  dated 23.3.2017 had also been announced on the floor of the House of Parliament by Mr. Bandaru Dattatreya, the then Union Minister for Labour & Employment, GOI on the same day i.e. 23.3.2017 and it was also assured by him on the floor of Parliament that the said benefit will be applicable to all the EPS pensioners whether they were petitioner or not.

12)        But unfortunately, on 31.5.2017, Shri Mukesh Kumar, RPFC-1 (Pension), without any competency/approval to undone/alter the approval granted by CBT & decision of MOL&E, issued an erroneous, inequitable & discriminatory interim advisory to all filed offices to restrict the benefit to the pensioners of only “Un-Exempted” establishments and to deny the same to the pensioners of “Exempted establishments” just on the wrong plea that in R.C.Gupta & ors case petitioners happen to be from “Un-Exempted” establishments. He, however, ignored & suppressed the facts that in the Apex Court’s orders dt. 31.3.2016, in two of the SLP’s, the petitioners were from an Exempted establishment and also same benefits have also been allowed by the EPFO to the pensioners of atleast nine (9) exempted establishments as under:

      Instrumentation Ltd

      Fertilizers & Chemicals Travancore (FACT)

      ITI Ltd

      Airports Authority of India (AAI)

      Kerala State Co-operative Agricultural Dev. Bank Ltd. (KSCADB)

      Kerala Minerals & Metals Ltd., Kollam (KM&M)

      Kerala State Inland Navigation Corp (KNCO)

      Kerala Agro Machinery Corp. (KAMCO)

      Malabar Cements

      Many other similarly placed petitioners of various Exempted establishments

The above facts were also suppressed/ concealed by the concerned officers/officials from PEIC in its 40^thmeeting and also from the Legal Advisor while seeking his advice on 31.5.2017 which is a serious matter.  Had these facts been brought on record & to their notice through the papers accessed by them, they would not have recommended as such

erroneously.

So, the aforesaid interim advisory is against the provisions of the Article 14 & 16 of the Indian Constitution and in violation of landmark five judge full constitution bench judgments of Apex Court in famous DS Nakara case and Deokinandan Prasad case.

13)        It is pertinent to mention that neither there is any mention of differentiation regarding EPS’95 pensioners of “Exempted” & “Un-exempted” establishments in any of the judgments of High Courts and Supreme Court nor such issue had ever been raised by EPFO in any court during the last 10 years i.e. since 2007 onwards prior to issue of interim advisory dated 31.5.2017 which is discriminatory, illegal, erroneous and inequitable and violative of article 14 & 16 of the Constitution of India.

14)      It is also a matter of record of Parliament that Hon’ble the then Union Minister of Labour & Employment who was also the Chairman of CBT had also stated/ assured on the floor of Parliament while replying to a question of Mr. NK Premachandran, MP, Kollam on 28.7.2017 that “As far as Supreme Court Judgment is concerned, we are implementing that. Last time in the parliament itself, I have indicated that to you.  I will examine the circulars which may not be in line with Supreme Court judgment.”  But nothing has been done till date in this regard.

15)      The matter of determination of pensionable salary exceeding the statutory wage ceiling limit and exercise of option under deleted proviso to Para 11(3) of EPS’ 95 has been agitated before many High Courts. 

16)      Hon’ble High Court of Kerala, in particular, in its very recent judgment dated 19.07.2017 in Writ Appeal No.2298 of 2015 filed by EPFO, after considering the detailed Affidavit no. 881/2017 filed by EPFO in the aforesaid WA rejecting contents of the erroneous interim advisory dt. 31.5.2017 as mentioned therein,had dismissed the Writ Appeal of EPFO on similar lines directing the EPFO that the “8.33% of the employer’s contribution proportionate to the salary of employees in excess of Rs.6500/- shall now be credited to the pension scheme and orders passed in accordance with law.  Needless to say the interest accrued in the provident fund account to that extent also will stand transferred to the pension account.  The employees shall also submit application along with their employer wherever the same has not been done”. This covers the retired employees also.

17)     Apex Court, in a catena of judgments has also held that only because one person has approached the Court that would not mean that persons similarly situated should be treated differently.  It has also been held by the Apex Court in DS Nakara case that it is the duty of the Government to avoid unwarranted litigation and not to encourage litigation for the sake of litigation.

18)     MOL&E in reply to various RTI applications has confirmed that neither any proposal had been received from EPFO regarding issue of said interim advisory dated 31.5.2017 nor any such approval has been granted to EPFO. 

19)     MOL&E has further stated that only approval dated 16.3.2017 has been granted to EPFO to allow members of the Employees Pension Scheme 1995 who had contributed on higher wages exceeding the statutory wage ceiling of Rs. 6500 in the Provident Fund to divert 8.33% of the salary exceeding Rs. 6500 to the Pension Fund with up-to-date interest as declared under EPF Scheme, 1952 from time to time to get the benefit of pension on higher salary on receipt of joint option of the Employer and Employee  (in compliance of which EPFO had issued the directive dated 23.3.2017). 

We, the pensioners belonging to establishments Exempted for Provident Fund but Un-Exempted for Employees’ Pension Scheme’95 earnestly request your good self to kindly direct CPFC, EPFO to immediately withdraw its erroneous and unapproved Interim Advisory dated 31.5.2017 and to restore the well considered & lawful decision of the Competent Authority i.e. CBT(EPF) and  Ministry of Labour & Employment, Govt. of India by implementing the valid & equitable directive dated 23.3.2017 issued by EPFO for granting the benefit of pension revision on actual/higher salary instead of on ceiling amount to the similarly situated retired pensioners of “Exempted” establishments at par with those of “Un-Exempted” establishments under EPS’95 after getting deposited the retrospective contribution/differential amount with interest w.e.f 16.11.1995 in accordance with the decision dated 4.10.2016 of the Apex Court.

Sir, your act of kindness shall give a new lease of life to the old aged poor pensioners and they will always bless you and remember you ever for this gracious act of kindness and justice which shall save them from running around for litigation at the fag end of their lives to get justice.

With kind regards,

Yours faithfully,

For & on behalf of Federation of Retired SAIL Employees (Regd)

(& Members of Exempted Establishments in India)

(V.N.Sharma)

Chairman

(Ram Agar Singh)

General Secretary

Copy by e-mail to:

·         Secretary, Labour, MOL&E

·         Addl. Secretary, Labour, MOL&E

·         Jt. Secretary, MOL&E

·         CPFC

·         Members of CBT- with a request to get the EPFO’s Interim Advisory dated 31.5.2017 withdrawn.

• Director (Finance, SAIL, New Delhi for info and n.a.
• All Member Associations of FORSE for info & n.a.

Will the minister concerned direct the EPFO authorities to act in favor of the concerned EPFO members based on the facts represented in the above said and similar pleas? (Not likely, Indian political bosses become assertive only for issues where they have some special interest!)

Will the EPFO authorities act for the benefit of the concerned members now? ( Not likely, they might try to pull on with litigation: Read this news)

Would it be necessary for the concerned members to approach the courts again? (Very likely)

What would be the final outcome?

Only time would tell.

After all it is democratic India, still in the process of learning good governance!

Even after seventy odd years!