Tata Motors in legal clash with EPFO over pension fund transfer: Report

In its annual report, Tata Motors noted that it had received requests from both current and former employees to extend pension benefits.

Tata Motors has got into a legal dispute with the Employees' Provident Fund Organisation (EPFO) concerning the transfer of its pension funds, according to a report by The Economic Times.

The automaker, which holds its own exempted pension fund, had sought to relinquish this exemption status and transfer its employee provident fund corpus to the EPFO. However, the EPFO has demanded comprehensive documentation and additional details about the pension corpus for all employees before it approves the transfer. The EPFO claims that the provided information on certain accounts was inadequate for processing the transfer, as detailed in court filings reviewed by the daily.

Government sources indicate that while the EPFO is willing to facilitate the transfer of the provident fund corpus, it is specifically requesting detailed information regarding the pension scheme. The EPFO has instructed Tata Motors to perform a thorough audit of its pension fund records and has rejected the company's request to surrender the exemption status.

Tata Motors has not commented on the matter. Moneycontrol has not independently verified the report.

According to Paragraphs 38 and 39 of the Employee Pension Scheme, the government can grant exemptions from the pension scheme's provisions. The EPFO requires compliance with these criteria before it will consider Tata Motors' plea, an official told ET.

The company, which reported losses for three consecutive years (2019-20, 2020-21, and 2021-22), sought automatic cancellation of the pension fund exemption and offered to cover the additional liabilities through actuarial valuation. Tata Motors applied to surrender the exempted pension fund effective October 1, 2019, but the 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 opt with their employer to contribute beyond the statutory limit and receive a pension based on the average salary of the last five years.

In its annual report, Tata Motors noted that it had received requests from both current and former employees to extend pension benefits. The company stated that to address these concerns and avoid prolonged litigation, it had approved the joint options on the EPFO portal and 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.

The EPFO, however, redirected all joint applications to Tata Motors' pension trust. The company subsequently filed a writ petition in the Delhi High Court, seeking an order for the EPFO to begin administering its pension fund and accept the joint applications. Additionally, trade unions have filed a joint writ petition requesting expedited transfer of the pension fund corpus and acceptance of the employees' joint applications.

The matter is scheduled for a hearing on August 8.