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Employee Pension Scheme Issues: A Case Study
Bengaluru’s Bhavesh Chandra Jha, a 36-year-old professional, found himself embroiled in a frustrating situation. Enrolled incorrectly in the Employees’ Pension Scheme (EPS) by his employer, Jha faced significant delays when he applied to withdraw his hard-earned savings. His case underscores a broader issue: workers often encounter administrative hurdles that can take over a year to resolve when they are mistakenly enrolled in EPS.
The reliance on coordination between employers and the Employees’ Provident Fund Organisation (EPFO) leaves many like Jha waiting up to 18 months before they can access their funds. “If anyone has incorrect EPS entries for April 2025, it can only be visited for correction by October-November 2026,” shared Kunal Kabra, founder and CEO of Kustodian.life, highlighting the lengthy process for employees.
The Complexity of EPS Contributions
Understanding the structure of EPS can seem daunting. Typically, 12% of an employee’s basic salary is funneled into the Employee Provident Fund (EPF) as a contribution from both the employee and employer. However, only a portion of the employer’s share—3.67%—goes to EPF; the remaining 8.33% is earmarked for EPS. This division means that if an employee’s salary crosses ₹15,000 after September 1, 2014, they can no longer be part of EPS. Jha’s predicament arose from this very guideline, as he was erroneously signed up for EPS despite the rule changes.
Kabra pointed out that accurate filling of Form 11—where new recruits must declare their previous EPF and EPS memberships—could have prevented Jha’s issues altogether. The case emphasizes the importance of thorough onboarding processes within organizations.
Challenges in Accessing Funds
The delays do not just frustrate employees; they can disrupt key financial plans. Ketan Das, PF business head at Finright, explained that many members face urgent financial needs such as home purchases or loan repayments. When withdrawal requests are denied due to incorrect EPS contributions, individuals are left in financial limbo. “Members need money now, but must wait,” Das stated, calling for a reassessment of the procedures that fuel these complications.
The backlog at PF offices exacerbates the wait times, as prolonged administrative tasks continue to delay the resolution of claims. Case backlogs only add to the stress faced by employees like Jha, who must repeatedly follow up on their claims.
EPFO’s Stance on Corrections
The EPFO has its reasoning for the delays in processing corrections, citing the need to adjust interest payments during transfers between EPS and EPF. They assert that proper interest credits need to be established first. However, the argument raises questions when juxtaposed against the fact that PF transfers can happen mid-year successfully.
Das critiques this approach, stating, “The procedure should be altered in favor of the members.” He emphasizes the urgency of making this process more efficient for people facing genuine financial crises tied to their retirement savings.
Conclusion: The Need for Clarification and Streamlining
Jha’s case serves as an example of how essential it is for employees to regularly review their Provident Fund account, particularly to check for any discrepancies in EPS contributions. The pivotal date of September 1, 2014, should serve as a critical reminder for all employees, as it significantly impacts their eligibility status in EPS.
For those navigating similar issues, preparedness for a slow and cumbersome correction process can mitigate some of the frustration. The bureaucratic landscape of EPS can be complex, but informed employees stand a better chance of ensuring their finances remain intact.
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Original source: www.livemint.com
