Warning of Contempt for Applying Pro-Rata Basis in High Pension Case
Parliament Has Already Defined the Pension Formula
The Himachal Pradesh High Court on Tuesday expressed strong disapproval over government officials failing to comply with its earlier order regarding pension determination, observing that the respondents are in contempt of court.
Justice Sandeep Sharma, in his order, emphasized that “Parliament has already laid down the pension formula as (Pensionable Salary × Pensionable Service ÷ 70), where pensionable salary refers to the average salary during the last 60 months of contribution and pensionable service refers to the actual duration of contributory service. Despite this, the Employees’ Provident Fund Office has calculated the petitioners’ pensions on a pro-rata basis.”
The bench pointed out that the petitioners belong to Category 3 employees, who contributed higher amounts, and therefore, the application of a pro-rata basis is inapplicable to their cases. The court stated, “Applying a pro-rata basis in their case is entirely unjustified.”
While the court was convinced that senior officials at the Employees’ Provident Fund Office were in contempt, it refrained from passing any punitive order after the counsel for the Regional Provident Fund Commissioner sought time to respond. The court granted a 10-day period and directed strict compliance with its judgment. It further warned that failure to comply would require the concerned officers to appear personally and explain why they should not be penalized for deliberate disobedience.
This order holds significant implications for employees covered under the Employees’ Pension Scheme (EPS), 1995—especially those contributing at higher salary levels. Thousands of pensioners across India have raised disputes over whether their pensions should be calculated based on actual salary or a capped contribution, and whether authorities are permitted to apply a proportional formula in such cases.
The matter is scheduled for the next hearing on September 23.
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