Court Orders Recalculation of Pensions, Ensures Fair Treatment and Interest on Delayed Payments
In a significant ruling, the Punjab and Haryana High Court has invalidated the pro-rata method for computing pensions for employees earning higher wages, under the Employees' Pension Scheme, 1995. Justice Harpreet Singh Brar delivered the judgment, impacting multiple petitioners who challenged the method prescribed by circulars dated 18 January 2025 and an internal email dated 14 February 2024.
The Court ruled that pensions should be calculated based on the average salary of the last 60 months preceding retirement, without bifurcating service periods. This judgment aligns with the original provisions of the Employees' Pension Scheme, which did not support a pro-rata basis for those contributing on higher wages.
The case, led by petitioner Surinder Kumar, contested the application of a formula that reduced pension benefits contrary to the scheme's intention. The Court emphasized the need for a liberal interpretation of pension laws to protect retirees' benefits, aligning with the Supreme Court's perspective in previous landmark judgments.
Further, the Court addressed the disparity in wage calculations for contributions and pension fixation, directing that all arrears be recalculated and released with interest. Respondents, including the Union of India, must pay an 8% annual interest on delayed pension arrears, reflecting principles of equity and fairness.
The judgment, declared as a 'judgment in rem,' mandates that all similarly situated individuals receive the same benefits, ensuring broader relief beyond the petitioners. The Court has provided a 12-week timeline for recalculating pensions and disbursing arrears, setting a precedent for pension schemes across the country.
Bottom Line:
Employees' Pension Scheme, 1995 - Pro-rata computation method for higher wage pension cases invalid - Pension to be calculated based on average salary of the last 60 months preceding retirement without bifurcation of service periods.
Statutory provision(s): Employees' Pension Scheme, 1995 - Paragraphs 11 and 12, Employees Provident Fund and Miscellaneous Provisions Act, 1952 - Section 6A
Surinder Kumar v. Union of India, (Punjab And Haryana) : Law Finder Doc id # 2908675
