EPS-95 Higher Pension: What the Bombay High Court Ruling Means for Private-Sector Employees Whose Company Runs Its Own PF Trust
On 19 October 2026 the Bombay High Court held that EPFO cannot reject a higher-pension joint option because the provident fund trust rules of an exempted establishment capped the employer's pension contribution. It set aside EPFO's rejections for retired staff of Abbott India, BEST, Raymond Steel and Tata Communications and gave EPFO eight weeks. This is what the judgment says, who it helps, how the higher pension is calculated, what it costs, the tax, and what to do next.
For three years, one group of private-sector employees has had a harder time than anyone else getting the higher EPS pension the Supreme Court opened up in November 2022: people whose employer ran its own provident fund trust instead of depositing PF with EPFO. EPFO rejected many of their applications for a reason that had nothing to do with the employee. The trust's rules, it said, capped the employer's pension contribution at the wage ceiling, so no higher pension was possible. On 19 October 2026 the Bombay High Court held that this is not a valid reason to reject a joint option. This guide reads the judgment, explains who it helps and who it does not, works out the higher pension and its cost on a real-looking example, and sets out what to do next.
Written on 25 October 2026 from the judgment's own text (Bombay High Court, Writ Petition No. 13752 of 2026 and connected petitions, decided on 19 October 2026 by Justice Sandeep V. Marne), the Supreme Court's judgment of 4 November 2022, EPFO's circulars and PIB releases. The worked example uses round, assumed figures to show the method; your own pension depends on your records and EPFO's working. This is an explanation of the law and the arithmetic, not legal advice on any individual case.
6 — writ petitions decided together, by retired staff of Abbott India, BEST, Raymond Steel and Tata Communications · 8 weeks — the time the court gave EPFO to process and allow their joint options · 4 — other High Courts (Madras, Karnataka, Calcutta, Allahabad) that had already held the same · 17.49 lakh — applications EPFO received by 11 July 2023 · 9.49% — the employer's pension share on pay above ₹15,000 for optees · ÷ 70 — the divisor in the EPS pension formula
EPS-95 higher pension in two minutes
Every month, 8.33% of your basic pay plus DA goes from your employer's share of PF into the Employees' Pension Scheme (EPS), but only up to a ceiling: ₹5,000 a month when the scheme began in 1995, then ₹6,500, ₹15,000 from 1 September 2014, and ₹25,000 from 17 September 2026. Your pension is worked out on that capped salary, which is why most EPS pensions are small.
The scheme always allowed an employee and employer to opt jointly for the pension contribution to be paid on actual pay. EPFO for years treated that option as closed. In EPFO v. Sunil Kumar B. (4 November 2022) the Supreme Court reopened it: members who were in service on 1 September 2014 got four more months to exercise the joint option, and the Court held that the scheme applies to employees of exempted establishments "in the same manner" as to everyone else. EPFO then ran an online window from 26 February 2023 to 11 July 2023 and received 17.49 lakh applications.
| Term | What it means in plain words |
|---|---|
| Joint option | A form signed by you and your employer asking for the pension contribution, and so the pension, to be on your actual pay instead of the ceiling |
| Exempted establishment | A company exempted from EPFO's PF scheme because it runs its own PF trust. The PF money sits with the trust; the pension part still goes to EPFO's pension fund |
| Trust rules | The rules of that private PF trust. Many said the employer's pension contribution would stop at the wage ceiling |
| Pensionable salary | The average pay on which pension is worked out: the last 60 months for pensions starting after 1 September 2014 |
| Demand letter | EPFO's letter stating the extra pension contribution, with interest, that must be paid in before the higher pension starts |
What the Bombay High Court decided on 19 October 2026
The court decided six writ petitions together, because they raised one question: can the private rules of a PF trust of an exempted establishment stop an employee from exercising the joint option for pension on higher wages under paragraph 11(3) and 11(4) of EPS, 1995?
| Employer | Who petitioned | Why EPFO had rejected the joint option |
|---|---|---|
| Abbott India (formerly Boots, then Knoll Pharmaceuticals; exempt until 2005) | Two employees | Trust deed put "express limits" on the employer's pension contribution (order of 11 September 2026, after an earlier remand) |
| BEST Undertaking, Mumbai | 39 retired employees | Trust rules restricted the contribution to the wage ceiling (order of 29 January 2025) |
| Raymond Steel (later Thyssenkrupp Electrical Steel, now JSW JFE) | One retired employee, already drawing pension on ceiling wages | Raymond's PF trust rules restricted the employer's pension contribution to the ceiling (order of 11 August 2025) |
| Tata Communications | Two employees | Establishment had restricted the pension contribution to the ceiling; EPFO also said PF was not paid on all heads of salary |
| Tata Communications, then Tata Communications Transformation Services | Two employees | Trust rules did not make them eligible; Forms 6A and 3A and challans not produced (order of 31 March 2025) |
EPFO's rejections rested on a head-office circular of 18 January 2025. Its paragraph 2, quoted in the judgment, said eligibility "should be determined on the basis of the extant Trust Rules of the exempted establishment", and that if a trust amended its rules after the Supreme Court's 2022 judgment, its members' applications "may not be considered". EPFO's own record of an audit meeting in June 2025 notes that disposals for exempted establishments "would have been predominantly based on the applicable Trust Rules".
The court disagreed, on four grounds:
- The question is settled. The Madras High Court (former BHEL employees, 2 September 2025), the Karnataka High Court (BEML, 30 April 2026), the Calcutta High Court (14 November 2025) and the Allahabad High Court (8 May 2026) had all held that trust rules cannot be used to deny the joint option. The Madras court also set the 18 January 2025 circular aside.
- Trust rules govern only the PF. In the court's words, the rules of a PF trust "operate only in respect of the provident fund". The pension scheme applies to employees of exempted establishments in the same way as to everyone else, so "a joint option cannot be rejected on the ground that the Trust Rules either envisage a cap/ceiling" on the employer's contribution.
- Missing employer records are not the employee's fault. Following its own earlier orders (including Kiran Rajaram Jadhav, 26 March 2026), the court said that where an employer does not produce records, EPFO must find other ways to verify them, including hearing the employee.
- A pending appeal is no reason to wait. EPFO said it has challenged a Madras Division Bench ruling in the Supreme Court (SLP (C) No. 31613 of 2026, in which contempt proceedings were stayed on 8 September 2026); the employees' counsel replied that the challenge is to an order in contempt proceedings, not to the Madras judgment itself. EPFO also pointed out that the Calcutta single-judge ruling has been stayed by a Division Bench. The court said "pendency of SLP cannot be a ground for keeping the present Petitions pending indefinitely", especially as every petitioner is retired.
On the Tata Communications case where EPFO argued PF was not paid on all salary heads, the court found PF had in fact been paid on basic pay above the ceiling, which was enough, and noted that EPFO's counsel, "beyond quoting the Circular", had not shown how it stood in the way.
The order: EPFO's rejection orders are set aside, and EPFO is directed "to process and allow" the petitioners' joint options for pension on higher wages within eight weeks. No costs.
Does the ruling help you? Who benefits and who does not
| Your situation | Where you stand after this ruling |
|---|---|
| Company ran its own PF trust; PF was paid on your actual pay; you filed the joint option by 11 July 2023; EPFO rejected it citing trust rules or the 18 January 2025 circular | Strongest position. Five High Courts now say this is not a valid ground. Ask EPFO to reopen, citing the judgment |
| Same, but EPFO also said the employer did not send Form 6A, 3A or challans | Strong. The Bombay High Court says EPFO must verify by other means and hear you |
| Your PF was paid only on the ceiling, never on your actual pay | Weaker. The courts' reasoning rests on PF having been paid on actual pay; the Karnataka court made an exception where transfer of those funds was refused |
| You did not file a joint option by 11 July 2023 | The ruling does not reopen the window |
| You retired before 1 September 2014 without ever exercising the option | Not covered: the Supreme Court said such members "would not be entitled to the benefit" of its judgment |
| Your employer deposited PF with EPFO (not a trust) | Trust rules were never the issue for you; this ruling is about exempted establishments |
Two limits matter. The judgment directs relief for the petitioners themselves; for anyone else it is a precedent that EPFO's offices in Maharashtra, Goa and the Union Territory of Dadra and Nagar Haveli and Daman and Diu should follow, and a persuasive one elsewhere, alongside each State's own High Court ruling. And the final word, whenever the question reaches it, will be the Supreme Court's; EPFO already has a petition there arising from the Madras litigation.
How the higher pension is calculated
EPFO states the formula on its own pension page:
Monthly pension = pensionable salary × pensionable service ÷ 70
- Pensionable salary. For pensions starting after 1 September 2014, the average monthly pay over the 60 months before you left the pension fund (EPFO circular of 1 June 2023). For pensions that started before 1 September 2014, the average of the last 12 months. The Supreme Court found no flaw in the move to 60 months.
- Pensionable service. The years you were in the pension scheme. Members with 20 years or more get two years' weightage added (paragraph 10(2); EPFO circular of 21 June 2017).
- The ceiling. Without a joint option, pensionable salary is capped at the ceiling. With one, it is your actual pay.
- Pro rata. EPFO's circular of 18 January 2025 also says pension on higher wages is computed "on pro-rata basis" under paragraph 12 of the scheme, which works out service before and after 1 September 2014 separately. That lowers the figure for long-serving members, and the method has been challenged in court. Your pension payment order shows EPFO's own working.
Worked example: one employee, two pensions
Take a retired employee of a company with its own PF trust. Assumed facts: EPS member from 1 April 1996, retired at 58 on 31 March 2025, so 29 years in the scheme, plus two years' weightage, 31 years. Average basic pay plus DA over the last 60 months: ₹90,000. PF was paid on actual pay throughout.
| Step | Pension on the ceiling | Pension on higher wages |
|---|---|---|
| Pensionable salary | ₹15,000 | ₹90,000 |
| Pensionable service with weightage | 31 years | 31 years |
| Formula | ₹15,000 × 31 ÷ 70 | ₹90,000 × 31 ÷ 70 |
| Monthly pension (simplified) | ₹6,643 | ₹39,857 |
| Difference | ₹33,214 a month before tax | |
Both figures are the simple form of the formula. EPFO's pro-rata split, which works the years before September 2014 separately, will bring both down for someone who joined in 1996, so treat ₹39,857 as an upper bound, not a promise.
What higher pension costs you
The higher pension is not free. The pension fund must receive what it would have received had the contribution always been on actual pay:
- 8.33% of the pay above the ceiling, for every month it exceeded the ceiling (from 16 November 1995 or the month your pay crossed the ceiling, whichever is later);
- from 1 September 2014, a further 1.16%, because Gazette notification S.O. 2061(E) of 3 May 2023 raised the employer's pension share to 9.49% on pay above ₹15,000 for optees. The Supreme Court had held that asking employees to pay this 1.16% was ultra vires, so it comes from the employer's share, not from your salary;
- interest on each month's shortfall.
For someone still in service, this is mostly transferred from the PF corpus to the pension fund, as the Supreme Court directed. For a retiree who has already withdrawn the PF, EPFO's demand letter asks for a deposit. EPFO's circular of 18 January 2025 says the dues cannot be netted against the pension arrears: eligibility "is crystallized only when the dues (with interest) have been received in the pension fund".
Worked example, continued: the cost and the payback
Assume pay was above the ceiling by an average of ₹30,000 a month for the last 20 years of service, and interest at about 8.5% a year, close to the EPF rate for most of that period.
| Item | Amount |
|---|---|
| 8.33% of ₹30,000, each month for 240 months | ₹2,499 a month |
| Extra 1.16% of ₹30,000 from September 2014 (127 months) | ₹348 a month |
| Contributions without interest | ₹6,43,956 |
| With interest to retirement, about | ₹16.5 lakh |
| Extra pension (simplified) | ₹33,214 a month |
| Years to recover the cost, before tax | about 4 |
On these figures the higher pension pays for itself in about four years and then pays for life, which is why so many people applied. Three things can change the answer: the pro-rata split lowers the extra pension; tax on the pension at your slab lowers it further; and the ₹16.5 lakh, if left in PF or invested, would itself have earned a return. The longer you expect to draw the pension, the better it looks. The lump sum, once paid into the pension fund, does not come back to you or your heirs as capital.
Tax on the higher pension and the arrears
- The pension is taxable. EPFO deducts TDS where the pension crosses the limit; its January 2025 circular notes that pension arrears and the higher pension both attract TDS and tax in the pensioner's hands.
- Arrears relief. If the arrears cover earlier years, section 157 of the Income-tax Act, 2025 (the old section 89) lets you spread them back to the years they relate to, so they are taxed at those years' rates instead of pushing this year into a higher slab. The claim form is Form 39 (formerly Form 10E), filed before the return.
- Old regime or new. Run the year with the arrears through the income tax calculator both ways before you choose; a large lump of arrears can change which regime is better that year.
What to do now
- Find out exactly why you were rejected. Read EPFO's rejection order. If it cites the trust rules, a wage ceiling in the trust deed, or the circular of 18 January 2025, the Bombay ruling speaks directly to you.
- Collect your proof. Salary slips or Form 16 showing pay above the ceiling, PF trust statements showing PF paid on actual pay, the joint option acknowledgment, and the employer's validation. If the employer has merged or the trust is closed, say so; the court said EPFO must verify by other means.
- Write to the Regional PF Commissioner. Ask for the rejection to be reviewed, citing Amit Gunvantrai Mehta v. EPFO, Bombay High Court, WP No. 13752 of 2026, decided on 19 October 2026, and your own State High Court's ruling. Keep a dated copy and a grievance number on EPFiGMS.
- If nothing moves, take advice on a writ petition. The petitioners here had to go to court; the court decided promptly because they were retired. A group petition with others from the same employer, as the 39 BEST retirees did, shares the cost.
- Plan for the demand letter. Keep the money ready, and check EPFO's working of the dues and the interest line by line before you pay.
- Watch the Supreme Court. EPFO's petition arising from the Madras litigation (SLP (C) No. 31613 of 2026) is where a nationwide answer could come from.
The road so far: a timeline
| Date | What happened |
|---|---|
| 22 August 2014 | EPS amendment (G.S.R. 609(E)): ceiling to ₹15,000 and a new joint option rule, from 1 September 2014 |
| 4 November 2022 | Supreme Court, EPFO v. Sunil Kumar B.: amendment valid; four more months to opt; exempted establishments covered "in the same manner"; employees' 1.16% held ultra vires |
| 26 February – 11 July 2023 | EPFO's online window; 17.49 lakh applications received |
| 3 May 2023 | S.O. 2061(E): employer's pension share 9.49% on pay above ₹15,000 for optees, from 1 September 2014 |
| 1 June 2023 | EPFO: pension on higher wages on the 60-month average where pension starts after 1 September 2014 |
| 18 January 2025 | EPFO circular: eligibility of exempted establishments by their trust rules; pension computed pro rata |
| 31 January 2025 | Final date for employers to upload wage details of pending applications |
| 2 September 2025 | Madras High Court: trust rules cannot be cited; the January 2025 circular set aside |
| 14 November 2025 | Calcutta High Court (single judge) holds the same; later stayed by a Division Bench |
| 30 April and 8 May 2026 | Karnataka (BEML) and Allahabad High Courts hold the same |
| 29 June 2026 | Employees' Pension Scheme, 2026 notified under the Code on Social Security, superseding EPS 1995 |
| 9 July 2026 | Madras High Court Division Bench rules for the employees; EPFO later files SLP (C) No. 31613 of 2026 in the Supreme Court |
| 19 October 2026 | Bombay High Court allows the six petitions; EPFO to allow the joint options within eight weeks |
Frequently Asked Questions
What did the Bombay High Court decide on EPS-95 higher pension? That EPFO cannot reject a joint option for pension on higher wages because the PF trust rules of an exempted establishment capped the employer's pension contribution or did not provide for it. It set aside EPFO's rejections in six petitions and directed EPFO to process and allow those joint options within eight weeks.
Does the ruling apply to me if my company has its own PF trust? It applies directly to the petitioners. For others in the same position it is a strong precedent, especially in Maharashtra and Goa, and it agrees with four other High Courts. You still have to ask EPFO to reopen your case, and a Supreme Court ruling, when it comes, will be final.
I never applied for higher pension. Can I apply now? Not on the strength of this ruling. EPFO's window for joint options closed on 11 July 2023, and the judgment does not reopen it.
How is EPS higher pension calculated? Pensionable salary × pensionable service ÷ 70, where pensionable salary is the average of your last 60 months' actual pay and service includes two years' weightage if you have 20 years or more. EPFO splits service before and after 1 September 2014 pro rata, which lowers the result for long service.
How much do I have to pay for higher pension? 8.33% of your pay above the ceiling for each month it was above, plus 1.16% more from September 2014, with interest. In the example above, ₹30,000 a month above the ceiling for 20 years comes to about ₹16.5 lakh with interest. EPFO's demand letter gives your exact figure.
Is higher pension worth it? On the example's simplified figures the extra pension repays the cost in about four years, before tax. Whether it is worth it for you depends on your age, health, tax slab and what the lump sum would earn elsewhere, since the amount paid into the pension fund is not returned as capital.
Is EPS pension taxable, and how are the arrears taxed? Yes, the pension is taxable and EPFO deducts TDS on it. Arrears relating to earlier years qualify for relief under section 157 of the Income-tax Act, 2025 (the old section 89), claimed in Form 39 (formerly Form 10E).
Has EPS 1995 been replaced? Yes. The Employees' Pension Scheme, 2026 was notified on 29 June 2026 under the Code on Social Security, 2020, superseding EPS 1995, after the EPFO board approved it in March 2026. It continues the 9.49% employer contribution for members who opted for higher pension. The joint options in this case were made under paragraph 11 of EPS 1995, and the court decided them under it.
Sources
The rules and figures in this article can be checked against these official sources.
- Amit Gunvantrai Mehta v. EPFO and connected petitions, Writ Petition No. 13752 of 2026, judgment of 19 October 2026 (Justice Sandeep V. Marne): PF trust rules cannot defeat the joint option (search by case number: AS, WP, 13752, 2026) High Court of Bombay
- Employees Provident Fund Organisation v. Sunil Kumar B., judgment of 4 November 2022 (2022 INSC 1171), paragraphs 38 and 44 Supreme Court of India
- Applications for validation of option / joint options: method of computation of pension (circular of 1 June 2023; 12-month and 60-month averages) Employees’ Provident Fund Organisation
- 1.16% increased contribution from the employer’s share into the pension fund on salary above ₹15,000: circular of 4 May 2023 with Gazette notification S.O. 2061(E) of 3 May 2023 Employees’ Provident Fund Organisation
- Application for validation of option / joint options: scrutiny of wage details, and orders for depositing or transferring the dues (circular of 23 April 2023) Employees’ Provident Fund Organisation
- Record note of the meeting on audit of disposal of pension on higher wages applications, 20 June 2025 (circulated 25 July 2025) Employees’ Provident Fund Organisation
- Benefit of two years’ weightage of service to members with 20 or more years of pensionable service (circular of 21 June 2017) Employees’ Provident Fund Organisation
- Employees’ Pension Scheme: membership, benefits and the pension formula (pensionable salary × service ÷ 70) Employees’ Provident Fund Organisation
- EPFO gives final opportunity till 31 January 2025 to employers to upload wage details for pension on higher wages; 17.49 lakh applications received till 11 July 2023 (release ID 2085518, 18 December 2024) Ministry of Labour and Employment (Press Information Bureau)
- Last date for applications for pension on higher wages extended to 11 July 2023 (release ID 1935487, 26 June 2023) Ministry of Labour and Employment (Press Information Bureau)
- 239th meeting of the Central Board of Trustees, EPF: new EPF, EPS and EDLI Schemes approved in alignment with the Code on Social Security (release ID 2234502, 2 March 2026) Ministry of Labour and Employment (Press Information Bureau)
- New social security schemes notified on 29 June 2026: EPF Scheme, EPS (G.S.R. 527(E)) and EDLI Scheme, 2026 KPMG in India (Flash News, 2 July 2026)
- Income-tax Act, 2025, section 15: salaries Income Tax Department
- Income-tax Act, 2025, section 157: relief for arrears of salary Income Tax Department
- Old and new section, rule and form numbers: the department’s mapping utility Income Tax Department