Kerala High Court has given such a strong decision to the Employees’ Pension Scheme (EPS‑95) that employers can’t make retrospective contributions above the statutory wage ceiling to secure higher pensions for retired employees. This came in response to the petitions filed by 67 retired workers of Cochin International Airport Limited (CIAL) to secure higher pension benefits.
The employees argued that their employer should be allowed to deposit contributions retrospectively based on their actual salaries rather than the statutory wage limit. CIAL even submitted a demand draft of ₹78.14 lakh (employer contributions and accrued interest) to the Employees’ Provident Fund Organisation (EPFO). Although a Single Judge had previously instructed EPFO to accept this payment, the Division Bench overturned that order, ruling in favour of statutory compliance.
The court stressed that EPS‑95 is based on an actuarial investment model, which means contributions should be made during the employment period and invested into the pension fund to earn profit. Retrospective payments would destroy this balance and harm the pension fund sustainability. In addition, the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 does not allow for retrospective enhancement of contributions.
One of the main aspects of the ruling was the need for a joint option. If employees and employers wish to contribute above the wage ceiling, they need to take advantage of this option during service. If this is not there, claims for higher pensions after retirement are invalid, they said. The court also ruled that retrospective contributions, even when accompanied by interest, do not change pension entitlements.
This has wide-ranging implications for retirees who did not opt for greater contributions during their service and whose pensions will not be augmented later on. And for employers it only tells them that even voluntary retrospective payments are unlawful. For EPFO, that is a testimony to its commitment to staying financially disciplined and to paying out what is actually earned during employment.
