The Regional Provident Fund Commissioner, Tamil Nadu V/S M.Mahaboob Basha - Consumer Court Case

Tamil Nadu

South Chennai

CC/357/2017

M.Mahaboob Basha - Complainant(s)

Versus

The Regional Provident Fund Commissioner, Tamil Nadu - Opp.Party(s)

M.L.Manickam

12 Feb 2020

ORDER

Date of filing : 09.11.2017

Date of Disposal : 12.02.2020

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, CHENNAI (SOUTH)

@ 2^ND Floor, T.N.P.S.C. Road, V.O.C. Nagar, Park Town, Chennai – 3.

PRESENT: THIRU. M. MONY, B.Sc., L.L.B, M.L. : PRESIDENT

TR. R. BASKARKUMARAVEL, B.Sc., L.L.M., BPT., PGDCLP. : MEMBER

C.C. No.356/2017

DATED THIS WEDNESDAY THE 12^TH DAY OF FEBRUARY 2020

S. Balasubramanian,

S/o. Mr. V.R. Swaminathan,

No.8, South Mada Street,

Thiruvanmiyur,

Chennai – 600 041. .. Complainant. ..Versus..

The Regional Provident Fund Commissioner,

Tamil Nadu & Pondicherry States,

No.20, Royapettah High Road,

Chennai – 600 014. .. Opposite party.

Counsel for the complainant : M/s. M.L. Manickam &

Mr. S. Jayaprakash

Counsel for the opposite party : M/s. K. Prabakar

ORDER

THIRU. M. MONY, PRESIDENT

This complaint has been filed by the complainant against the opposite party under section 12 of the Consumer Protection Act, 1986 prays to sanction annual relief from 01.07.2009 (the date after retirement) to till this Calendar year and to pay arrears of Rs.7,439/- with interest at 18% p.a. and to pay a sum of Rs.10,000/- towards the cost of proceedings and for the mental agony suffered by the complainant.

1. The averments of the complaint in brief are as follows:-

The complainant submits that he was an employee of the Tamil Nadu Co-operative Milk Producers’ Federations Limited; retired from service after continuous service of more than 30 years on 30.06.2009. The complainant was contributing to the Employees’ Family Pension Scheme, right from its introduction with effect from 01.06.1971 after opting for the scheme. The Tamil Nadu Co-operative Milk Producers’ Federations Limited, being the employer of the complainant was deducting monthly subscription under the Family Pension Scheme from the monthly salary of the complainant. The complainant submits that the Employees Pension Scheme, 1995 came to be framed in terms of the powers conferred by Sec 6-A of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 replacing the Employees Family Pension Scheme, 1971 and the scheme came into force on 16.11.1995. Consequent on the introduction of the Employees Family Pension Scheme, the complainant contributed to the above scheme till his retirement. After retirement, the monthly pension of the complainant was sanctioned to his PPO No.TN/MAS/522228 and has since then been receiving Employees Pension duly credited in his Savings Banks Account. While so, the complainant has been brought to attention by his colleagues and the All India Pensioners Welfare Association that in the middle of April 2017 to the effect that lawful entitlement of annual relief in terms of Para 32 of the Employees Pension Scheme, 1995 has not been sanctioned to the complainant hitherto sanctioned till 2000. Therefore, the complainant is entitled to the annual relief till today every year from the date of entitlement of pension.

2. The complainant submits that he comes squarely within the definition of ‘Consumer’ within the meaning of Section 2(1)(d)(ii) of the Consumer Protection Act, 1986 in as much as, by being a member of the Employees Family Pension Scheme and the replaced 1995 Employees Pension Scheme, the complainant and thereby, availed the services rendered by the opposite party. The opposite party herein is responsible for the implementation and working of the 1995 Employees’ Pension Scheme and is therefore a service given within the meaning of Section 2(1)(o) of the Consumer Protection Act. The intendment and scope of the provisions envisioned in the said para 32 casts a mandatory obligation on the part of the opposite party – Provident Fund Commissioner as the Governing Agency and facilitator to facilitate upward revision of pension. So far, the complainant is given to understand that there was revision of pension under Para 32 at 4% on 16.11.1996 at 5.5% on 31.03.1998 at 4% on 31.03.1999 and at 4% on 31.03.2000 and thereafter, the scale of benefit admissible under Para 32 has not been effected. The extension of annual relief is mandatory and should have been done annually. For the past 17 years, the opposite party has not sanctioned the annual relief which therefore amounts to deficiency in service by the opposite party and other subordinate officers.

3. The complainant submits that the scheme is a social security scheme framed with the objective to support the retired employees and their families with bare means of livelihood and his family. However, the scope of the scheme has been viewed with not so beneficial interpretation leading thereby non-sanctioning of lawful entitlements under Para 32 of the scheme. This is quite an improper appreciation of law and breach of trust envisioned under the scheme and my entitlement of annual relief need to be restored from the date of my pension eligibility from 01.07.2009 with interest at 18% p.a. unlawfully denied to the complainant. The complainant is entitled to the arrears of Annual relief of Rs.7,439/- quantified at 4% P.A. till this year together with interest at 18% P.A. The complainant is having served the above company for a very long period. On his retirement pensionary benefits as envisaged under the Employees’ Pension Scheme, 1995 for his sustenance and livelihood. The precise intendment and object of para 32 is only to ensure that annual relief is given to the employees to meet out the inflation of food items and other means necessary for ordinary maintenance of an employee and his family. Therefore, as the governing body / Implementing Agency, the opposite party should have ensured and discharged the obligatory service for the compliance of the relief envisioned under para 32 of the scheme. The failure on the part of the opposite party amounts to gross deficiency in service. The failure and non-compliance as above violates Article 14 & 21 of the Constitution of India. The act of the opposite party amounts to deficiency in service and unfair trade practice which caused great mental agony. Hence, the complaint is filed.

4. The brief averments in the written version filed by opposite party is as follows:

The opposite party specifically denies each and every allegation made in the complaint and put the complainant to strict proof of the same. The opposite party states that the complainant is drawing pension under PPO No.TN/MAS/522228 which is under the jurisdiction of the Regional Office, Chennai and the complainant therefore as laid against The Regional Provident Fund Commissioner, Tamil Nadu and Pondicherry States is not maintainable and is also outside the Jurisdiction of the Hon’ble Forum as no such Regional Office for Tamil Nadu & Pondicherry exist at the moment. The office of the Regional Provident Fund had been bifurcated into several regions and separate commissioners have been appointed with Separate Jurisdictions. Hence, the complaint as laid by the complainant is not maintainable either in law or on facts and is liable to be dismissed in limini. The opposite party prays that the complainant may put to strict proof of the allegations made in para 2–9. The opposite party states that the complainant is seeking relief under para 32 of the Employees’ Pension Scheme, 1995 and the Para 32 is reproduced below for clear understanding of the legal position

“Valuation of the Employees Pension Fund and review of the rates of contributions and quantum of the pension and other benefits

The Central Government shall have an annual valuation of the Employees’ Pension Fund made by a Valuer appointed by it.
At any time, when the Employees Pension Fund so permits the Central Government may alter the rate of contributions payable under this scheme or the scale of any benefit admissible under this Scheme or the period for which such benefit may be given”.

5. The opposite party states that the complaint has been filed against the Regional Provident Fund Commissioner, Tamil Nadu & Pondicherry State. The opposite party states that at present, there is no Regional Office for Tamil Nadu and Pondicherry State and the same has been bifurcated into several regions and separate Commissioners have been appointed with separate Jurisdictions. The opposite party states that the Regional Provident Fund Commissioners of any region are not empowered to review the rate of contributions or declare or permit any scale of benefit to the pensioners of any region and it is the Central Government vested with such powers as seen from para 32 of the Employees Pension Scheme, 1995. In the light of the above, the complaint as against the opposite party is unsustainable and the same is liable to be dismissed and without making the Union Government of India through the Secretary, Ministry of Labour and Employment as a party to present complaint the entire complaint is liable to be dismissed on the ground of non-joinder of necessary party. The opposite party states that the complaint is liable to be dismissed on the ground of mis-joinder of parties where the present opposite party is not the competent authority for acting under para 32 of the Employees Pension Scheme, 1995 and it is the Central Government which is competent to alter any benefit admissible under the scheme from time to time.

6. The opposite party further denies the averment that the entitlement of annual relief from 01.07.2009 with interest at 18% p.a. unlawfully denied to the complainant is false as no relief had been declared by the Central Government under para 32 of the Scheme. The opposite party further denies the averment that the complainant is entitled to arrears of Annual Relief of Rs.7,439/- quantified at 4% p.a. as paid between (1996 – 2000) till this year together with interest at 18% p.a. are all averred without any substance and the complainant may be put to strict proof of the same. The complainant’s averment that as the governing body/ implementing Agency, the opposite party should have ensured and discharged the obligatory service for the compliance of the relief envisioned under para 32 of the scheme, further failure on the part of the opposite party amounts to deficiency in service, failure and on compliance as above violates Article 14 & 21 of the constitution of India are all unfounded and baseless averment alleged in the complaint without any basis as against the opposite party and as such the entire complaint is misconceived and devoid of merits as against the opposite party and the same is liable to be dismissed. The opposite party further denies the averment made in para 8 of the complainant with regard to cause of action and there is no cause of action as against this opposite party and the entire cause of action is nothing but bundle of lies ordained for the purpose of sustaining this frivolous complaint and the same is to be dismissed on the sole ground preliminary objection with regard to depicting the opposite party which had no jurisdiction to deal with the subject matter of the complaint.

7. To prove the averments in the complaint, the complainant has filed proof affidavit as his evidence and documents Ex.A1 to Ex.A4 are marked. Proof affidavit of the opposite party is filed and documents Ex.B1 to Ex.B3 are marked on the side of the opposite party.

8. The points for consideration is:-

Whether the complainant is entitled the annual relief from 01.07.2009 to till date with arrears of Rs.7,439/- and interest at the rate of 18% p.a. as prayed for?
Whether the complainant is entitled to a sum of Rs.10,000/- towards the cost of proceedings and compensation for mental agony as prayed for?

9. On point:-

Both parties filed their respective written arguments. Heard their Counsels also. Perused the records namely; the complaint, written version, proof affidavits and documents. The learned Counsel for the complainant would contend that the complainant was an employee of the Tamil Nadu Co-operative Milk Producers’ Federations Limited; retired from service after continuous service of more than 30 years as on 30.06.2009; is not denied by the opposite party. On the other hand, the complainant has not produced any document to prove such long service and date of retirement except the notice Ex.A2 showing the date of retirement. Further the contention of the complainant is that when the complainant was working in the above said Tamil Nadu Co-operative Milk Producers’ Federations Limited, he contributed to the Employees Family Pension Scheme, 1971; immediately after the introduction of the scheme with effect from 01.06.1971 by way of deducting the amount from his monthly salary till his retirement is not denied by the opposite party. Further the contention of the complainant is that as per Section 6-A of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 replacing the Employees Family Pension Scheme, 1971 the Employees Pension Scheme, 1995 was introduced on 16.11.1995. The complainant has duly contributed to the Employees’ Pension Scheme, 1995 also by way of deducting the amount from his salary till his retirement is also not denied by the opposite party. Further the complainant contended that immediately after the retirement, the complainant was sanctioned monthly pension of Rs.1,682/- as per Ex.A1 vide P.P.O. No.TN/MAS/522228 dated:04.01.2010 and credited in the complainant’s bank account.

10. Further the contention of the complainant is that the Regional Employees Provident Fund Commissioner for Tamil Nadu & Pudhucherry is the responsible authority in respect of all Employees’ Provident Fund activities i.e. Maintaining provident fund account and payment of pension and other benefits are rest with them under the Central Government. Since, the Regional Provident Fund office is situated within the jurisdiction; this Hon’ble Forum is competent to entertain the complaint. The contention raised by the opposite party that this Forum have no jurisdiction to entertain the complaint on the ground that the Regional Provident Fund Commissioners of any region are not empowered to review the rate of contributions or declare or permit or sanction any scale of benefit to the pensioners of any region and it is the Central Government; vested with such powers as seen from para No.32 of the Employees Pension Scheme, 1995 has nothing to do with the jurisdiction of this Forum. On a careful perusal of Ex.B1, Actuarial Valuation Report as on 31.03.2015 for liability towards benefit payable under “EPS, 1995” conclusion and Suggestions An endeavour may be made to have statistical cell in the EPFO so as to generate scheme, specific mortality, attrition and salary escalation etc. Therefore, the opposite party has every right to review the rate of contribution etc. Further the contention of the complainant is that the service rendered by the Regional Provident Fund Commissioner amounts to “Service” within the meaning of Section 2(1)(o) of the Consumer Protection Act and the member a “Consumer” within the meaning of Section 2(1)(d) of the Consumer Protection Act.

11. The learned Counsel for the complainant cited the decision reported in:

SUPREME COURT OF INDIA

Appeal (Civil) No.6447/2001

Between

Regional Provident Fund

-Versus-

Bhavani

Held that

“A perusal of the Scheme clearly and unambiguously indicates that it is a ‘service’ within the meaning of Section 2(1)(o) and the member a ‘consumer’ within the meaning of Section 2(1)(d) of the Act. It is therefore without any substance to urge that the services under the Scheme are rendered free of charge and therefore, the Scheme is not a ‘service’ under the Act. Both the State as well as the National Commission have dealt with this aspect in detail and rightly come to the conclusion that the Act was applicable in the case of the Scheme on the ground that its member was a ‘Consumer’ under Section 2(1)(d) and the Scheme was a ‘service’ under Section 2(1)(o)”.

22. Several other earlier decisions were also referred to, where a similar view has been expressed.

23. We are not also able to appreciate Dr. Padia’s submission that the cases of the respondents should not be considered as they had applied at the fag end of their careers for correction of their dates of birth in the appellant’s records, which practice had been strongly discouraged by this Court. The aforesaid principle cannot apply to the case of the respondents as their dates of birth had been correctly recorded in the records of the company, including the respondents’ service records, on the basis whereof they had retired from the company’s services.

24. We therefore, have no hesitation in upholding the orders passed by the National Commission. All the six appeals filed by the Regional Provident Fund Commissioner are accordingly dismissed”.

The contention raised by the opposite party is that the complainant is not a ‘Consumer’; is not acceptable as per the above dictum of the Hon’ble Supreme Court of India.

12. Further the contention of the complainant is that the opposite party miserably failed to grant annual relief in terms of para No.32 of the Employees’ Pension Scheme, 1995 which reads as follows:

32. Valuation of the Employees’ Pension Fund and review of the rates of contributions and quantum of the pension and other benefits

(1) The Central Government shall have an annual valuation of the Employees’ Pension Fund made by a Valuer appointed by it.

(2) At any time, when the Employees’ Pension Fund so permits the Central Government may alter the rate of contributions payable under this Scheme or the scale of any benefit admissible under this Scheme or the period for which such benefit may be given”.

13. Further the contention of the complainant is that earlier the opposite party sanctioned the annual relief upto the year 2000 as per para 32 of the Employees Family Pension Scheme, 1995 to the complainant (i.e.) 4% on 16.11.1996 at 5.5% on 31.03.1998 at 4% on 31.03.1999 and at 4% on 31.03.2000 as per Ex.B1(S) page Nos.1 to 12 EPS, 1995, Valuation Report which is not denied. Further the contention of the complainant is that as per para No.32 of the Employees Pension Scheme, 1995, the extension of annual relief is mandatory; the opposite party denied such annual relief for the past 17 years which amounts to deficiency in service and unfair trade practice is not denied by the opposite party.

14. As per the 11^th Valuation Report in Employees’ Pension Scheme, 1995 as on 31.03.2007, the Recommendations reads as follows:-

13. Recommendations

1. Make one time lump sum contribution of Rs.41,120/- Cr to the Pension Fund to make good the deficit.

As the current contribution rate of 9.49% of pensionable salary (Employers’ 8.33% & Gove. 1.16%) is inadequate revise the rate upwards to 13% for the existing members so that the deficit is met by higher future contribution

Achieve (through professional investment management) returns on investment of not less than 9% p.a. over the future combined with increase in contribution rate (for existing members) of not less than 1%

(Before taking any decision with respect to the above recommendation as actuarial valuation based on truly representative data of adequate volume and quality is necessity to assess the deficit with a greater degree of certainty)

15. Similarly, as per the 12^th Valuation report in Employees’ Pension Scheme, 1995 as on 31.03.2008, the Recommendations reads as follows:-

13. Recommendations

1. Make one time lump sum contribution of Rs.54,203/- Cr to the Pension Fund to make good the deficit.

As the current contribution rate of 9.49% of pensionable salary (Employers’ 8.33% & Govt. 1.16%) is inadequate revise the rate upwards to 14.5% for the existing members so that the deficit is met by higher future contribution

16. As per the 13^th Valuation Report in Employees’ Pension Scheme, 1995 as on 31.03.2009 which reads as follows:-

13. Recommendations

1. Make one time lump sum contribution of Rs.61,608/- Cr to the Pension Fund to make good the deficit.

Achieve (through professional investment management) return on investment of not less than 9% p.a. over the future combined with increase in contribution rate (for existing members) of not less than 3%

17. As per the 14^th, 15^th & 16^th Report on the Actuarial Valuation (combined) in the Employees’ Pension Scheme, 1995 (EPS 95) as on 31.03.2012 which reads as follows:-

Conclusions and Suggestions

Sensitivity analysis is recommended once the data is available to do such analysis, current data availability and purpose of valuation does not call for the analysis as of now.
We would also suggest to consider the requirement given by us earlier of Rs.14,042 crore pending final validation for giving minimum pension of Rs.1,000/- pm.

18. As per 17^th Actuarial Valuation Report in the Employees’ Pension Scheme, 1995 (EPS 95) as on 31.03.2013 which reads as follows:-

Conclusions and Suggestions

Sensitivity analysis is recommended once the data is available to do such analysis, current data availability and purpose of valuation does not call for the analysis as of now.
Even though at the time of preparing this report the amendment in the scheme is known but same is not considered for the valuation as EPFO required valuation based on the scheme applicable as on 31^st March 2013.

19. As per 18^th Actuarial Valuation Report in the Employees’ Pension Scheme, 1995 (EPS 95) as on 31.03.2014 which reads as follows:-

Conclusions and Suggestions

Sensitivity analysis is recommended once the data is available to do such analysis, current data availability and purpose of valuation does not call for the analysis as of now.
Even though at the time of preparing this report the amendment in the scheme is known but same is not considered for the valuation as EPFO required valuation based on the scheme applicable as on 31^st March 2014.

As per the 19^th Valuation Report as on 31.03.2015 for liability towards benefit payable under Employees’ Pension Scheme, 1995 it reads as follows:-

Conclusions and Suggestions

Salary ceiling for the EPS is not raised for quite some time, the benefit gets eroded due to the inflation, but considering the effect the increase in the wage ceiling which can have on the financial health of the scheme, some alternative method to take care of inflation should be considered. Any enhancement in salary ceiling for EPS may be done after looking at the effect on the fund. In our opinion if enhancement in the salary ceiling is made then a revision in the scheme will be required so as to give service credit at different level of salary ceiling.
There is no protection for inflation on the pension in payment the same also needs consideration, but this will put burden on the scheme finances. There is a provision in case of valuation surplus which may be considered in future.
An exercise as to collection of the full data for all the type of beneficiary may be undertaken so as to have proper evaluation of the scheme. In the current year an effort was made to collect the data and we have got 100% of the Pensioners and Beneficiary pensioner’s data and 58% in respect of the active member’s data which is substantially large as compared to the earlier data provision. The data in respect of other category of members and balance data for active members should be collected.
An endeavour may be made to have statistical cell in the EPFO so as to generate scheme specific mortality, attrition and salary escalation etc.
Having proper asset liability matching and investment of the money considering the cash flow will help in proper investment and earning of the fund. Investment department may work closely with the benefit department to achieve the goal of higher earnings. This can be possible when the data required for cash flow projection is available.
Pension is a long term liability and the discount rate and earning rate are driven by the economic factors. It is unlikely that economic factors will remain static for such a long term. Considering a static discount and earning rate would give a scenario of the liability based on the current economic scenario. As the scheme is an ongoing one and benefit and contributions are defined any variation in the actuarial parameters may be re-adjusted in annual valuations so as to have a perspective of the scheme year on year.
Sensitivity analysis is recommended once the data is available to do such analysis, current data availability and purpose of valuation does not call for the analysis as of now.
The surplus of Rs.5,026.86 crore can accommodate a onetime relief of 5% on the pension in payment, we understand that the subsidy given by the government for minimum pension of Rs.1,000/- shall continue, As the data is as on March 15 and the relief is going to be prospective, after considering cost of one-time relief there will still be a surplus of app Rs.100 crore, this surplus we feel is required as the total liability of the fund is large.
Any future relief shall be given based on future surplus if any.

“We refer to the discussion our office had with EPFO and also draft report submitted for valuation of EPS 1995 as on 31.03.2015. The final report is submitted along with this letter”.

20. As per 20^{th &}21^st Actuarial Valuation Report in the Employees’ Pension Scheme, 1995 (EPS 95) as on 31.03.2016 & 31.03.2017 which reads as follows:-

Conclusion and Suggestions:

An exercise as to collection of the full data for all the type of beneficiary may be undertaken so as to have proper evaluation of the scheme. In the current year an effort was made to collect the data and we have got 100% of the Pensioners and Beneficiary pensioner’s data and higher number in respect of the active member’s data. However information shared for active members is substantially large as compared to the earlier data provision. The data in respect of other category of members and balance data for active members should be corrected.
While submitting the data in electronic format column with “EPS Salary” and components. For valuation of net obligation we have considered, the EPS salary given in the data as the salary eligible for benefit.
An endeavour may be made to have statistical cell in the EPFO so as to generate scheme specific mortality, attrition, and salary escalation etc.
Salary ceiling for the EPS is not linked to the inflation movement and hence usually the benefit gets eroded due to the inflation effect, but considering the effect the increase in the wage ceiling which can have on the financial health of the scheme, some alternative method to take care of inflation should be considered. Any enhancement in salary ceiling for EPS may be done after looking at the effect on the fund. In our opinion if enhancement in the salary ceiling is made then a revision in the scheme will be required so as to give service credit at different level of salary ceiling.
Having proper asset liability matching and investment of the money considering the cash flow will help in proper investment and earning of fund. Investment department may work closely with the benefit department to achieve the goal of higher earnings. This can be possible when the data required for cash flow projection is available.
Pension is a long term liability and the discount rate and earning rate are driven by the economic factors. It is unlikely that economic factors will remain static for such a long term. Considering a static discount and earning rate would give a scenario of the liability based on the current economic scenario. As the scheme is an ongoing one and benefit and contributions are defined, any variation in the actuarial parameters may be re-adjusted in annual valuations so as to have a perspective of the scheme year on year.
Sensitivity analysis is recommended once the data is available to do such analysis current data availability and purpose of valuation does not call for the analysis as of now.

21. Equally, the Executive Summary as per the report, as on 31.03.2016, 31.03.2017 which reads as follows:-

Executive Summary

“We have been asked to prepare a valuation report for EPS 95 as on 31.03.2017. For the purpose of valuation, data was supplied to our office electronically. The quality and quantity of data needs improvement however for valuation purpose adjustments were made in data received to make it in line with EPS census. Valuation has been made in respect of 18.77 crore members and 0.56 crore pensioners and beneficiary pensioners. EPS 95 has been designed to pay pension to each member from age 58 with accrual rate of 1.43% for each year of contributory service. Contribution is collected @ 8.33% of salary out of the employers’ contribution to the provident fund account and Government is contributing @ 1.16% of the salary subject to the salary ceiling of Rs.15,000/-. Majority of the subscriber’s contribution is coming with a salary ceiling of Rs.15,000/-.

Membership is mainly divided in four categories:

1) Active Members are the members who are current contributors, and are entitled to benefit in future,

2) Current Beneficiaries who are getting pensionary benefits and no future contribution is expected from them.

3) Members entitled for deferred benefit and who have opted for scheme certificates,

4) Members who are entitled for withdrawal benefit but have still not claimed the benefit, these are referred as Dormant Accounts.This category is very large in number.No appropriate data is available in respect of them.

Investment of the fund is made in the manner that the returns are secured and maximized, currently the return on the fund is over 8.50% p.a.

All Actuarial Valuation assumptions will lead to pace of funding and it is essential to make reasonable assumptions to estimate the cost of obligation.Four key assumptions are:

Rate of Discounting
Rate of Future Salary growth
Mortality Rate
Attrition Rate
All these assumptions were discussed and consensus was arrived at after series of discussions with EPFO before finalizing valuation results. Table below gives a snap shot of valuation results and data used for valuation.

Valuation Summary as on 31.03.2017	Amount in Rs.
Active Members	4,12,37,384
Active Beneficiaries	56,49,797
Deferred Beneficiaries / Dormant Accounts	14,65,04,679
Future Salary Rise	7.00% p.a.
Rate of Discounting	8.00% p.a.

Present Value of all Benefits (in crores)	7,37,700.57
Present Value of future Contributions (in crores)	4,03,756.28
Corpus as on 31.03.2017 (in crores)	3,18,412.38
Net Liability (in crores) (Actuarial Shortfall)	15.531.91

Net Liability of Rs.15,531.91 crores in terms of Present Value, is less than 2.50% of the total liability and is not indicative of increase required in contribution. It is recommended that EPS should look into investment return more carefully and should not increase benefits without consulting the Actuary and also should perform sensitivity analysis more frequently. It is also recommended that EPS should try and capture more appropriate data & recompile scheme rules based on various amendments and court judgement with effective dates which can be used for future valuations, more specifically undertake a detailed study of dormant account and decide on the approach and assumptions of these accounts.

22. Further the contention of the complainant is that considering the long service, the complainant was sanctioned with a monthly pension of Rs.1,682/- as per para 32 of the Employees Pension Scheme, 1995, the complainant made representation to grant annual relief at the specified rate of weightages for every 2 years. But on a careful perusal of employees Pension Scheme, 1995, there is no weightage provided. The complainant is entitled only the annual relief as per Employees’ Pension Scheme, 1995. Now, the complainant is a Senior Citizen has reached of above 60 years and suffering from several ailments and under periodical treatment expending huge amount towards medicine and treatment. He is at the fag end of his life. He is entitled a decent death. The complainant is entitled to live a decent life also. The Employees Pension Scheme, 1995 is a social security scheme framed with the objective to support the retired employees and their family members with bare means of livelihood; cannot be viewed as a beneficial scheme but for eking livelihood, was denied by the opposite party one way or other without any proper reason. The allegation of deficit is not acceptable because, the fund was created with the contribution of the employer and the employee after the introduction of the Employees Pension Scheme, 1995 and for “proper asset liability matching and investment of the money considering the cash flow will help in proper investment and earning of the fund. Investment department may work closely with the benefit department to achieve the goal of higher earnings. EPS 95 has been designed to pay pension to each member from age 58 with accrual rate of 1.43% for each year of contributory service. Contribution is collected @ 8.33% of salary out of the employers’ contribution to the provident fund account and Government is contributing @ 1.16% of the salary subject to the salary ceiling of Rs.15,000/-“.

23. The Counsel for the complainant cited the decision reported in:

IN THE HIGH COURT OF JUDICATURE OF MADRAS

W.P. No.14368/2018

Between

ONGC Retired Employees’ Welfare Association

-Versus-

Union of India & 6 others

Held that

22. Hon’ble Supreme Court in “(2018) 6 SCC 195 (Paradeep Phosphates Limited versus State of Orissa and others)” wherein, particularly, he would draw reference to paragraph 20, which is extracted hereunder:

“20. Undoubtedly, it is a cardinal principle of law that beneficial laws should be construed liberally.The Industrial Dispute Act, 1947 is one of the welfare legislations which intends to provide and protect the benefits of the employees.Hence, it shall be interpreted in a liberal and broad manner so that maximum benefits could reach to the employees.Any attempt to do strict interpretation would undermine the intention of the legislature.In a catena of cases, this Court has held that the welfare legislation shall be interpreted in a liberal way”.

23. Hon’ble Supreme Court reported in “(2013) 2 SCC 772 (Kallakkurichi Taluk Retired Officials Association, Tamil Nadu and others versus State of Tamil Nadu, etc), wherein, the Hon’ble Supreme Court has held in paragraphs 32 & 33 as under:

“32. First and foremost, it needs to be understood that the quantum of discrimination, is irrelevant to a challenge based on a plea of arbitrariness, under Article 14 of the Constitution of India.Article 14 of the Constitution of India ensures to all, equality before the law and equal protection of the laws.The question is of arbitrariness and discrimination.These rights flow to an individual under Articles 14 and 16 of the Constitution of India.

The extent of benefit or loss in such a determination is irrelevant and inconsequential.The extent to which a benefit or loss actually affects the person concerned, cannot ever be a valid justification for a court in either granting or denying the claim raised on these counts.The rejection of the claim of the by the High Court, merely on account of the belief that the carry home pension for employees who would retire after 01.06.1988, would be trivially lower than those retiring prior thereto, amounts to bagging the issue pressed before the High Court.The solitary instance referred to above, which is not a matter of dispute even at the hands of the first clearly demonstrates, that in a given situation, an employee retiring on or after 01.06.1988 could suffer a substantial loss, in comparison to an employee retiring before 01.06.1988.We are, therefore satisfied, that the High Court clearly erred while determining the issue projected before it”.

“36. Considering the fact that, the pension fund is created for the purpose of providing succour to the employees in their old age, taking into account the further fact that the fund is created by collecting contributions from the employers and employees, casting no financial burden on the State, it follows that no scheme that defeats the purpose of the enactment by reducing the pension payable to the employees in their old age to a ridiculously low amount, which is not sufficient even for ensuring a decent life to them, cannot be sustained. There is no justification for stealing bread from the mouths of the pensioners to secure the Pension Fund. Though the Fund is replenished by the present workers, its beneficiaries are the old and infirm former workers; the pensioners. The Fund is meant for their sustenance. It is the duty of the Central Board to administer the Fund efficiently and to augment the Fund through wise investments and professional management so as to ensure that it meets the commitment to pay pension to the employees. The said amendments are therefore ultravires the power to frame schemes”.

The complainant is claiming a sum of Rs.7,439/- towards arrears and claiming the annual relief from 01.07.2009 (the date after retirement) with the compensation and cost.

24. The learned Counsel for the opposite party contended that the complainant was an employee of the Tamil Nadu Co-operative Milk Producers’ Federations Limited and retired from the service on 30.06.2009; was contributed to the Employees Family Pension Scheme, right from the introduction with effect from 01.06.1971 thereafter continued the contribution to the Employees Pension Scheme, 1995 and drawing pension under P.P.O. No.TN/MAS/522228 which is under the jurisdiction, Regional Office, Chennai but coming under Central Government. The Regional Provident Fund Commissioner, Tamil Nadu & Pondicherry is not in existence. Hence, the case itself is not maintainable. But the structure of the Employees Provident Fund Organisation is as follows:-

1) Headquarters headed by Central Provident Fund Commissioner.

2) 21 Zonal ACC Offices each headed by an Additional Central Provident Fund Commissioner.

3) Regional Offices each headed by Regional Provident Fund Commissioner.

4) District Offices each headed by Additional Provident Fund Commissioner.

There are two zonal offices in the state of Tamil Nadu & Puducherry 1) Zonal ACC Office Chennai & Puducherry having its office at 37 Royapettah High Road at Chennai having supervision over the Regional offices of Ambattur, Chennai-I, Chennai-II, Puducherry, Tambaram & Vellore. 2) Zonal Acc Office Tamil Nadu (Excluding Chennai) having its Office at Dr Balasundaram Road, Coimbatore having supervision over the Regional Offices of Coimbatore, Madurai, Nagercoil, Salem, Tirunelveli & Tirchy. Hence, the complaint is liable to be dismissed on the ground of non-joinder of necessary party and mis-joinder of party and without jurisdiction. But on a careful perusal of records, the complainant filed this case against the Regional Provident Fund Commissioner, Tamil Nadu & Pondicherry which the office is now also available received the notice, raised the contentions of defence in volume. As per the Specific Relief Act, the Government authority holding office shall comply the orders and can have every right to take suitable defence. Mere bifurcation of the office shall not take away the jurisdiction. The complainant is a retired employee and Senior citizen claiming annual benefits implicated the Provident Fund office, Chennai as a party dealing the Provident Fund related to the employees.

25. Further the contention of the opposite party is that as per para No.32 of the Employees Pension Scheme, 1995, the Central Government alone have right to value the Employees Pension Scheme and review the rate of contribution and sanction the quantum of pension and other benefits. The Employees’ Pension Scheme, 1995 is not a mandatory one. But an obligatory on the part of the opposite party. The Regional Provident Fund Commissioners are not empowered to review the rate of contribution or declare or sanction any benefit to the pensioners of any region and it is the Central Government. But on the due instruction of the Central Government the Auditor was appointed, duly evaluated from 1998 to 31.03.2015 as per Ex.B1 and was circulated to all the Regional Provident Fund Commissioners. Thereby, the question of non-joinder of necessary party not arises.

26. As per para 32 & 32(A) of the Employees Provident Fund Scheme, 1952 it reads as follows:-

32. Recovery of a member’s share of contribution –

(1) The amount of a member’s contribution paid by the employer (or a contractor) shall, notwithstanding the provisions in this Scheme or any law for the time being in force or any contract to the contrary be recoverable by means of deduction from the wages of the member and not otherwise :

Provided that no such deduction may be made from any wage other than that which is paid in respect of the period or part of the period in respect of which the contribution is payable :

Provided further that the employer (or a contractor) shall be entitled to recover the employee’s share from a wage other than that which is paid in respect of the period for which the contribution has been paid or is payable where the employee has in writing given a false declaration at the time of joining service with the said employer (or a contractor) that he was not already a member of the Fund :

Provided further that where no such deduction has been made on account of an accidental mistake or a clerical error, such deduction may, with the consent in writing of the Inspector, be made from the (subsequent) wages.

(2) Deduction made from the wages of a member paid on daily, weekly or fortnightly basis should be totalled up to indicate the monthly deductions.

(3) Any sum deducted by an employer (or a contractor) from the wage of an employee under this Scheme shall be deemed to have been entrusted to him for the purpose of paying the contribution in respect of which it was deducted.

32-A. Recovery of damages for default in payment of any contribution

(1) Where a employer makes default in the payment of any contribution to the Fund, or in the transfer of accumulations required to be transferred by him under sub-section (2) of section 15 or sub-section (5) of section 17 of the Act or in the payment of any charges payable under any other provisions of the Act or the Scheme or under any of the conditions specified under section 17 of the Act, the Central Provident Fund Commissioner or such officer as may be authorised by the Central Government, by notification in the Official Gazette in this behalf, may recover from the employer by way of penalty, damages at the rates given in the table below:-

TABLE

Sl.No. Period of default Rates of Damages

(percentage of

arrears per annum)

(a) Less than two months Five

(b) Two months and above but less than four months Ten

(c) Four months and above but less than six months Fifteen

(d) Six months and above Twenty five

(2) The damages shall be calculated to the nearest rupee, 50 paise or more to be counted as the nearest higher rupee and fraction of a rupee less than 50 paise to be ignored.

27. Further the contention of the opposite party is that the 4^th valuation reveals surplus in the Employees’ Pension Scheme, 1995. Thereby, the Central Government granted additional relief. The Employees’ Pension Scheme, 1995 final report dated:31.03.2000 was in deficit. But on the careful perusal of Ex.B1, there is a surplus of Rs.100 Crores as per the 19^th Valuation Report as on 31.03.2015. The valuer recorded surplus of Rs.5,026.86 crore as on 31.03.2015.

As per the 19^th Valuation Report as on 31.03.2015 for liability towards benefit payable under Employees’ Pension Scheme, 1995 it reads as follows:-

Conclusions and Suggestions

“The surplus of Rs.5,026.86 crore can accommodate a onetime relief of 5% on the pension in payment, we understand that the subsidy given by the government for minimum pension of Rs.1,000/- shall continue, As the data is as on March 15 and the relief is going to be prospective, after considering cost of one-time relief there will still be a surplus of app Rs.100 crore, this surplus we feel is required as the total liability of the fund is large”.

The surplus during 2014-2015 in the Pension fund has been attributed mainly to the following factors:-

Increase in new membership under EPF Scheme, 1952 and Employees Pension Scheme, 1995 (EPS) which occurred due to increase in wage ceiling from Rs.6,500/- to Rs.15,000/- per month.
Higher contribution from the existing members on increased wage ceiling from Rs.6,500/- to Rs.15,000/- per month.
Increase in government contribution of 1.16% of wage due to increase in wage ceiling from Rs.6,500/- to Rs.15,000/- per month.

The valuer had suggested that the net surplus of Rs.5,026.86 crores in terms of value is less than 2.50% of the total liability and recommended that EPS should not increase the benefit.

The Valuer reported Rs.15,531.91 Crores Deficit for the period 01.04.2015 to 31.03.2017”.

But the valuer has not given the break up figures regarding the Employers contribution, employees contribution, Government contribution and the increase of pensioners etc.

28. On a careful perusal of Ex.B1, Valuation Report as on 31.03.2016 which reads as follows:-

Conclusion and Suggestions:

An exercise as to collection of the full data for all the type of beneficiary may be undertaken so as to have proper evaluation of the scheme. In the current year an effort was made to collect the data and we have got 100% of the Pensioners and Beneficiary pensioner’s data and higher number in respect of the active member’s data. However information shared for active members is substantially large as compared to the earlier data provision. The data in respect of other category of members and balance data for active members should be corrected.
While submitting the data in electronic format column with “EPS Salary” and components. For valuation of net obligation we have considered, the EPS salary given in the data as the salary eligible for benefit.
An endeavour may be made to have statistical cell in the EPFO so as to generate scheme specific mortality, attrition, and salary escalation etc.
Salary ceiling for the EPS is not linked to the inflation movement and hence usually the benefit gets eroded due to the inflation effect, but considering the effect the increase in the wage ceiling which can have on the financial health of the scheme, some alternative method to take care of inflation should be considered. Any enhancement in salary ceiling for EPS may be done after looking at the effect on the fund. In our opinion if enhancement in the salary ceiling is made then a revision in the scheme will be required so as to give service credit at different level of salary ceiling.
Having proper asset liability matching and investment of the money considering the cash flow will help in proper investment and earning of fund. Investment department may work closely with the benefit department to achieve the goal of higher earnings. This can be possible when the data required for cash flow projection is available.
Pension is a long term liability and the discount rate and earning rate are driven by the economic factors. It is unlikely that economic factors will remain static for such a long term. Considering a static discount and earning rate would give a scenario of the liability based on the current economic scenario. As the scheme is an ongoing one and benefit and contributions are defined, any variation in the actuarial parameters may be re-adjusted in annual valuations so as to have a perspective of the scheme year on year.
Sensitivity analysis is recommended once the data is available to do such analysis current data availability and purpose of valuation does not call for the analysis as of now.

“The surplus of Rs.5,026.86 crore can accommodate a onetime relief of 5% on the pension in payment, we understand that the subsidy given by the government for minimum pension of Rs.1,000/- shall continue, As the data is as on March 15 and the relief is going to be prospective, after considering cost of one-time relief there will still be a surplus of app Rs.100 crore, this surplus, we feel is required as the total liability of the fund is large. Any future relief shall be given based on future surplus if any”.

29. Equally, the Executive Summary as per the report, as on 31.03.2016, 31.03.2017 which reads as follows:-

Executive Summary

Membership is mainly divided in four categories:

1) Active Members are the members who are current contributors, and are entitled to benefit in future,

2) Current Beneficiaries who are getting pensionary benefits and no future contribution is expected from them.

3) Members entitled for deferred benefit and who have opted for scheme certificates,

4) Members who are entitled for withdrawal benefit but have still not claimed the benefit, these are referred as Dormant Accounts. This category is very large in number. No appropriate data is available in respect of them.

Investment of the fund is made in the manner that the returns are secured and maximized, currently the return on the fund is over 8.50% p.a.

All Actuarial Valuation assumptions will lead to pace of funding and it is essential to make reasonable assumptions to estimate the cost of obligation. Four key assumptions are:

Rate of Discounting

Rate of Future Salary growth

Mortality Rate

Attrition Rate

All these assumptions were discussed and consensus was arrived at after series of discussions with EPFO before finalizing valuation results. Table below gives a snap shot of valuation results and data used for valuation.

Valuation Summary as on 31.03.2017	Amount in Rs.
Active Members	4,12,37,384
Active Beneficiaries	56,49,797
Deferred Beneficiaries / Dormant Accounts	14,65,04,679
Future Salary Rise	7.00% p.a.
Rate of Discounting	8.00% p.a.

Present Value of all Benefits (in crores)	7,37,700.57
Present Value of future Contributions (in crores)	4,03,756.28
Corpus as on 31.03.2017 (in crores)	3,18,412.38
Net Liability (in crores) (Actuarial Shortfall)	15.531.91

Conclusions and Suggestions

An exercise as to collection of the full data for all the type of beneficiary may be undertaken so as to have proper evaluation of the scheme. In the current year an effort was made to collect the data and we have got 100% of the Pensioners and Beneficiary pensioner’s data and higher number in respect of the active member’s data. However information shared for active members is substantially large as compared to the earlier data provision. The data in respect of other category of members and balance data for active members should be corrected.
While submitting the data in electronic format column with “EPS Salary” and components. For valuation of net obligation we have considered, the EPS salary given in the data as the salary eligible for benefit.
An endeavor may be made to have statistical cell in the EPFO so as to generate scheme specific mortality, attrition, and salary escalation etc.
Salary ceiling for the EPS is not linked to the inflation movement and hence usually the benefit gets eroded due to the inflation effect, but considering the effect the increase in the wage ceiling which can have on the financial health of the scheme, some alternative method to take care of inflation should be considered. Any enhancement in salary ceiling for EPS may be done after looking at the effect on the fund. In our opinion if enhancement in the salary ceiling is made then a revision in the scheme will be required so as to give service credit at different level of salary ceiling.
Having proper asset liability matching and investment of the money considering the cash flow will help in proper investment and earning of the fund. Investment department may work closely with the benefit department to achieve the goal of higher earnings. This can be possible, when the data required for cash flow projection is available.
Pension is a long term liability and the discount rate and earning rate are driven by the economic factors. It is unlikely that economic factors will remain static for such a long term. Considering a static discount and earning rate would give a scenario of the liability based on the current economic scenario. As the scheme is an ongoing one and benefit and contributions are defined, any variation in the actuarial parameters may be re-adjusted in annual valuations so as to have a perspective of the scheme year on year.
Sensitivity analysis is recommended once the data is available to do such analysis, current data availability and purpose of valuation does not call for the analysis as of now.

30. Further, the contention of the opposite party is that the Valuer reported Rs.15,531.91 Crores Deficit for the period from 01.04.2015 to 31.03.2017 was challenged before the Parliament. But for the past 17 years annual relief was not sanctioned by the opposite party even after there was a huge surplus amount. The claim of annual relief of Rs.7,439/- with interest at the rate of 18% p.a. of the complainant is imaginary.

Considering the facts and circumstances of the case, this Forum is of the considered view that the opposite party shall pay the annual relief from the date of filing of this complaint (i.e.) 09.11.2017 at the rate of 1.43% as per the design of the Employees’ Pension Scheme, 1995 on par with the pension amount received by the complainant. The opposite party also shall pay a sum of Rs.5,000/- towards compensation for mental agony and cost of Rs.5,000/- to the complainant.

In the result, this complaint is allowed in part. The opposite party is directed to pay the annual relief from the date of filing of this complaint (i.e.) 09.11.2017 at the rate of 1.43% as per the design of the Employees’ Pension Scheme, 1995 on par with the pension amount received by the complainant. The opposite party is also directed to pay a sum of Rs.5,000/- (Rupees Five thousand only) towards compensation for mental agony and cost of Rs.5,000/- (Rupees Five thousand only) to the complainant.

The above amounts shall be payable within six weeks from the date of receipt of the copy of this order, failing which, the said amounts shall carry interest at the rate of 9% p.a. to till the date of payment.

Dictated by the President to the Steno-typist, taken down, transcribed and computerized by her, corrected by the President and pronounced by us in the open Forum on this the 12^th day of February 2020.

- Sd- -Sd-

MEMBER PRESIDENT

COMPLAINANT SIDE DOCUMENTS:-

Ex.A1	04.01.2010	Copy of Pension Payment Order under Ref No.TN/MAS/522228
Ex.A2	21.07.2017	Copy of representation of the complainant to the opposite party requesting sanction of annual relief
Ex.A3	21.07.2017	Copy of RPAD/Courier Consignment Slip for representation sent
Ex.A4	30.08.2017	Copy of working sheet of arrears

OPPOSITE PARTY SIDE DOCUMENTS:-

Ex.B1		Copy of balance sheet of Employees Pension Fund year wise by the Actuary from 1998 to 31.03.2015
Ex.B2	08.05.2013	Copy of Minister for State’s reply to a question on the Unstarred question on the subject Session 228, Question No.4601
Ex.B3		Copy of Valuation Report, 2017

- Sd- -Sd-

MEMBER PRESIDENT

Tamil Nadu

South Chennai

CC/357/2017

M.Mahaboob Basha - Complainant(s)

Versus

The Regional Provident Fund Commissioner, Tamil Nadu - Opp.Party(s)

M.L.Manickam

12 Feb 2020

ORDER

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