Himachal Pradesh High Court Dissatisfied Over Pension Calculation Issue

Justice Sandeep Sharma emphasized that Parliament has already laid down the formula for pension determination — Pensionable Salary × Pensionable Service ÷ 70.

The Himachal Pradesh High Court on Tuesday expressed dissatisfaction over the failure of government officials to comply with its earlier ruling on pension calculation, stating that the respondents were in contempt of court.

In its order, Justice Sandeep Sharma pointed out that Parliament has clearly defined the formula for calculating pension: Pensionable Salary × Pensionable Service ÷ 70. Here, pensionable salary refers to the average salary drawn during the last 60 months of contributory service, while pensionable service refers to the actual duration of the employee’s contributory service.

Despite this, the Employees’ Provident Fund office calculated the petitioners’ pensions on a proportional basis. The court observed that the petitioners belong to Category 3 employees who contributed more, and therefore applying a proportional calculation to them would be unjust.

The court remarked, “Applying a proportional basis in their case is completely unwarranted.”

While the court was convinced that senior officials at the Provident Fund office were in contempt, it refrained from issuing any punitive orders after the counsel for the Regional Provident Fund Commissioner sought time. The court granted a 10-day extension and directed strict adherence to its judgment. It warned that failure to comply would compel the officials to appear in person and explain why they should not be penalized for willful defiance.

The order holds significant implications for employees covered under the Employees’ Pension Scheme (EPS), 1995 — particularly for those contributing at higher salary levels. Thousands of pensioners across India have raised disputes regarding whether their pensions should be calculated based on actual salaries or capped contributions, and whether authorities can apply a proportional approach in such cases.

The next hearing in this matter is scheduled for September 23.