Pension Schemes — Amendments

Amendment	Year	Description	Impact
Employees' Pension (Amendment) Scheme, 2014	2014	This amendment capped the maximum pensionable salary for EPS at Rs. 15,000 per month, impacting the calculation of pension for higher-earning employees. It also introduced a requirement for an additional 1.16% contribution on salaries exceeding Rs. 15,000 for those opting for higher pension.	Significantly altered the benefit structure of EPS, leading to reduced pensions for higher-earning employees. It was challenged in various courts, culminating in the Supreme Court's 2022 judgment which largely upheld the amendment but provided a window for eligible employees to opt for higher contributions on actual salary, creating a complex implementation scenario for EPFO.
Finance Act, 2017 (for NPS)	2017	This amendment made the 60% lump sum withdrawal from NPS Tier I corpus at retirement (age 60) entirely tax-exempt. Previously, only 40% was tax-exempt, and the remaining 20% was taxable unless used for annuity purchase.	Enhanced the tax efficiency of NPS, making it more attractive for retirement savings. It brought NPS on par with other retirement products like EPF, where withdrawals are largely tax-exempt, thereby encouraging greater participation and long-term investment in the scheme.