Such an option should be exercised within the time limit fixed by the Supreme Court in Sunil Kumar or within such time extended by the Employees Provident Fund Organisation.
The rejection of higher EPS pension application on the ground that no prior contribution was made to the Pension Fund on wages exceeding the ceiling limit, or that no option was exercised before September 1, 2014, is unsustainable in law, if the contribution was made on higher wages to the provident fund.
The contention that only those employees who have contributed on actual wages in excess of the ceiling limit to the Pension Fund are eligible to contribute a higher amount under paragraph No.11(4) of the Scheme, 1995 cannot be accepted.
Therefore, the employees ended up making higher contributions based on their actual wages to the Provident Fund instead of the pension fund.As a result, the EPFO rejected their higher pension claim, prompting them to take the matter to court.
This judgment does not deal with the question as to whether similar claims of the members under the Employees’ Pension Scheme, retired before September 1, 2014 can be entertained.
Employees who were members of the Employees Pension Scheme, 1995 as on September 1, 2014, in exempted establishments, are entitled to exercise joint option under Paragraph 11(4), even if no option was exercised under Paragraph 11(3) prior to the amendment, provided the contribution was made on actual wages, subject to other applicable eligibility criteria.
Such an option should be exercised within the time limit fixed by the Supreme Court in Sunil Kumar or within such time extended by the Employees Provident Fund Organisation.
The rejection of higher EPS pension application on the ground that no prior contribution was made to the Pension Fund on wages exceeding the ceiling limit, or that no option was exercised before September 1, 2014, is unsustainable in law, if the contribution was made on higher wages to the provident fund.
The contention that only those employees who have contributed on actual wages in excess of the ceiling limit to the Pension Fund are eligible to contribute a higher amount under paragraph No.11(4) of the Scheme, 1995 cannot be accepted.
The rejection of the higher EPS pension application on the ground that the applicable Trust Rules of the establishment did not provide for contribution to the pension fund is impermissible, except in a situation where employers and employees refused to transfer the funds credited on actual wages in the provident fund to the pension fund.
Main objections of EPFO behind higher pension of these employees
Karnataka High Court order and discussion
R.C Gupta Supreme Court precedent applies to this case
Even if exempt trust rules do not enable contribution to the pension fund on higher wages, higher pension cannot be denied
Trust surrendered exemption in 2022
Government of India’s financial burden can’t be a reason for rejection of higher pension of eligible employees
On April 30, 2026, the Karnataka High Court ruled that employees can get higher EPS 95 pension if they were in service as on September 1, 2014 and were members of EPS and also contributed to PF based on their actual wages through a joint option even though it was limited by wage ceiling caps.The court made it clear that they did not address whether this ruling could extend to those who retired before September 1, 2014.In this case, as detailed below, the exempt trust employees contributed to the Provident Fund based on their actual wages, while their contributions to the pension fund were based on the wage ceiling limit.Even though the employees wanted to contribute to the Pension Fund on the basis of their actual salaries, the Employee Provident Fund Organisation (EPFO) did not allow this. Therefore, the employees ended up making higher contributions based on their actual wages to the Provident Fund instead of the pension fund.As a result, the EPFO rejected their higher pension claim, prompting them to take the matter to court. This judgement (Writ Petition No. 19885 of 2025) was given by Justice Anant Ramanath Hegde who quashed the EPFO’s rejection orders for employees' higher pension of an exempt trust company.As reported by LiveLaw, the high court ruled that members of the Provident Fund Trusts of the exempted establishments, who have contributed to the Provident Fund on actual wages (not on wage ceiling limits), but contributed to the Pension Fund only on the capped pensionable wages (not on actual wages), can rightly claim a higher pension.Ultimately, the Karnataka High Court rejected EPFO’s contentions and directed them to accept the joint option exercised by both the employees and employers and then calculate the pension payable on actual wages within 90 days.But the court also clarified that this judgement is applicable only to those employees who were members of the EPS pension scheme as of September 9, 2014 and not those who retired before that date.Thus the Karnataka High Court ultimately held:The main objections raised by EPFO for rejecting higher pension demand by these employees are under the following two categories:(a) The provisions of the Trust Rules of the exempted establishments do not provide for contribution on wages exceeding the ceiling limit to the Pension Fund.(b) That the members of the Fund have not contributed to the Pension Fund on the wages exceeding the prescribed ceiling limit before the cut-off date of September 1, 2014, fixed under paragraph 11(4).The EPFO had contended that eligibility to claim a higher pension is governed by the criteria prescribed under paragraph 11(4) of the Scheme, 1995, as well as the governing Trust Rules of the exempted establishments.The high court pointed out that even if the Trust Rules do not specifically provide for such contribution to the pension fund, Paragraph No.39 of the Scheme, 1995, comes to the aid of the employees.The high court also said that it is well settled that in the event of conflict between the Trust Rules and Scheme, 1995, one which is favourable to the employee will prevail.The high court said that since the Scheme, 1995 provides for contribution on actual wages to the pension fund, on establishing the contribution to the provident fund, and on actual wages, the right will be available to the employee to exercise joint option, subject to any other eligibility criteria.For those unaware, before September 1, 2014, paragraph 11(3) gave employees an option to contribute to the Pension Fund based on their actual wages and no time period was stipulated for this.However, when the government amended this paragraph post 2014, a new paragraph 11(4) was inserted which stopped the high pension contributions based on actual wages for the members who were exercising the option for higher pension before September 1, 2014.In addition, clause 11(4) also stipulated six months time, extendable by another six months, for sufficient cause to be shown, to exercise the joint option by employee and employer for a higher pension based on actual contributions.A summary of the judgement is as follows:The Karnataka High Court said that the employees who filed this case have contributed to the Provident Fund on actual salary in excess of ceiling wages.Therefore, the high court said that the law in R.C.Gupta, will come to their aid to exercise the joint option, to claim pension on higher salary by exercising the joint option as the Supreme Court in the R.C. Gupta case has held that there is no time limit to exercise the option and in the Sunil Kumar case, the Supreme Court endorsed the view in the R.C. Gupta case, and further fixed the time to exercise the joint option.The high court also said that EPFO’s rejection of higher pension of those employees who had filed this case is not in line with the Supreme Court precedents.Case law cited: R.C. Gupta & Ors. Etc. Vs. Regional Provident Fund Commissioner Employees Provident Fund Organisation & Ors (2018) 14 SCC 809The high court said that the contention that the Trust Rules do not provide for contribution on wages exceeding the ceiling cannot, by itself, defeat the statutory right recognised under the Scheme, 1995.The high court said that the paragraph 39 of the Scheme 1995, which deals with exemption from the Scheme 1995, provides for such exemption from the application of Scheme 1995, only if the other pension scheme to which the employee is a member is on par with the Scheme, 1995 or more favourable to the employeeThus the high court ruled that when the Scheme 1995, provides, under paragraphs 11(3) and 11(4) that the employer and employee are entitled to exercise the joint option, for contribution on actual wages, to the pension fund, in excess of ceiling wages, the EPFO cannot deny the right of the employer and employee to exercise the joint option.The high court said that in addition, in both the R.C. Gupta and Sunil Kumar cases, the Supreme Court did not stipulate that the exercise of joint option is permissible for contribution for pension fund on actual salary, only if the Trust Rules provide for such contribution.The Karnataka High Court pointed out that “the Trust Rules even if, does not specifically provide for such contribution to the pension fund, Paragraph No.39 of the Scheme, 1995, comes to the aid of the employees.”The high court also clarified that if the EPFO authorities under the Scheme,1995, are able to establish that despite insistence to contribute on higher wages, the employee has refused to contribute on higher wages to the pension fund, then conclusion may differ.The high court also said that it is well settled that in the event of conflict between the Trust Rules and Scheme, 1995, one which is favourable to the employee will prevail.The high court said: “Since the Scheme, 1995 provides for contribution on actual wages to the pension fund, on establishing the contribution to the provident fund, on actual wages, the right will be available to the employee to exercise joint option, subject to any other eligibility criteria.”The applications seeking joint option have been rejected on the premise that the petitioners in those petitions were members of the exempted establishments. The high court said that it is noticed from the records that the exemption was surrendered in 2022.The high court said: “Thus, it is a case of non application of mind by the respondent authorities (EPFO) under the Act, 1952.”The high court further said that it is also relevant to note that the Supreme Court in paragraph No.50.2 in Sunil Kumar , has expressly held that the amended provisions of the Scheme apply in the same manner as it applies to unexempted establishments.The Union of India had urged that if the employees' claim is allowed, it would result in a huge financial burden on the organisation and the Union of India.The high court said that they are of the view that the entitlement of the employees will have to be determined based on the provisions of the Employees' Provident Fund Scheme, 1952 and Employees' Pension Fund Scheme, 1995The high court said: “If the employees are otherwise entitled to exercise the option under the applicable scheme, such entitlement cannot be curtailed on the premise that it will impose a huge financial burden on the organisation.”This being the position, the Karnataka High Court said that they are of the view that the applications could not have been rejected in Writ Petitions No. 22068/2025, 32829/2025, 32843/2025, 32887/2025, 38022/2025 on the premise that the petitioners were employees of unexempted establishments. Thus, said impugned orders in those petitions have to be set-aside.The high court also made it clear that in these petitions, the court has proceeded to adjudicate the controversy in respect of the employees who were the members of the Employees Provident Fund, and Employees Pension Scheme, employed as of September 1, 2014. This judgment does not deal with the question as to whether similar claims of the members under the Employees’ Pension Scheme, retired before September 1, 2014 can be entertained.
