In a legal clash, Tata Motors finds itself at odds with the Employees’ Provident Fund Organisation (EPFO) regarding the transfer of its pension funds.
The automaker, which maintains its own exempted pension fund, had initially sought to relinquish this exemption status and transfer its employee provident fund corpus to the EPFO.
However, the EPFO has raised specific demands for comprehensive documentation and additional details related to the pension corpus for all employees before granting approval.
Court filings reviewed by the daily reveal that the EPFO found certain account information inadequate for processing the transfer.
Tata Motors vs. EPFO: Exemption Status and Transfer Challenges
Government sources indicate that while the EPFO is open to facilitating the transfer of the provident fund corpus, it insists on receiving detailed information specifically concerning the pension scheme.
As part of this process, the EPFO has instructed Tata Motors to conduct a thorough audit of its pension fund records. Notably, the EPFO has rejected the company’s request to surrender its exemption status.
Tata Motors has remained silent on the matter, refraining from commenting.
According to Paragraphs 38 and 39 of the Employee Pension Scheme, the government has the authority to grant exemptions from the pension scheme’s provisions.
Compliance with these criteria is essential before the EPFO will consider Tata Motors’ plea, as confirmed by an official.
The company, which faced losses for three consecutive years (2019-20, 2020-21, and 2021-22), sought automatic cancellation of the pension fund exemption.
In exchange, Tata Motors offered to cover the additional liabilities through actuarial valuation. Despite applying to surrender the exempted pension fund effective October 1, 2019, the resolution process remains unresolved.
In November 2022, the Supreme Court ruled that individuals who were members of a statutory pension fund as of September 1, 2014, could choose to contribute beyond the statutory limit.
This option allows them to receive a pension based on the average salary of the last five years.
Also Watch: How Generative AI is Transforming Organizational Culture, Click here
Exemption Status and Transfer Challenges
In its annual report, Tata Motors acknowledged receiving requests from both current and former employees to extend pension benefits.
To address these concerns and avoid prolonged legal battles, the company approved joint options on the EPFO portal. Tata Motors also communicated its intention to fund the additional liability.
Consequently, a provision of Rs 691.07 crore was recorded for the nine months ended December 31, 2023, and disclosed as an exceptional item.
However, the EPFO redirected all joint applications to Tata Motors’ pension trust. In response, the company filed a writ petition in the Delhi High Court, seeking an order for the EPFO to administer its pension fund and accept the joint applications.
Simultaneously, trade unions filed a joint writ petition urging expedited transfer of the pension fund corpus and acceptance of the employees’ joint applications.
The matter is scheduled for a hearing on August 8.
Note: We are also on WhatsApp and YouTube, to get the latest news updates, Join our Channels. WhatsApp– Click here and subscribe to YouTube – Click Here for LinkedIn– Click Here.
