Tata Motors Battles EPFO Over Employee Pension Scheme Transfer: Audit Discrepancies at the Forefront

Mumbai: Tata Motors, one of the few companies with its own exempted pension fund, is in a legal battle with the Employees’ Provident Fund Organisation (EPFO) over transferring its pension funds. The automaker wants to give up its exemption status and transfer its employee provident fund corpus to the EPFO. However, the EPFO demands more details and documents related to the pension corpus of all employees, citing incomplete information on certain accounts as a barrier to the transfer, according to court filings seen by ET.

Government sources told ET that while the EPFO has agreed to transfer the provident fund corpus, it seeks more details for the pension scheme. The EPFO has asked Tata Motors to audit its pension fund records thoroughly and has rejected the company’s right to surrender its exemption status.

Tata Motors declined to comment on the matter.

Under Paragraphs 38 and 39 of the Employee Pension Scheme, the government can grant exemption to a company from the pension scheme’s operation. The EPFO wants Tata Motors to meet the criteria under this section before considering the company’s request, an official said.

Tata Motors faced losses for three consecutive years (2019-20, 2020-21, and 2021-22) and sought automatic cancellation of its pension fund exemption, offering to cover the additional liability estimated through actuarial valuation. In 2019, the company applied to surrender the exempted pension fund effective October 1, but the process remains incomplete.

In November 2022, the Supreme Court ruled that those 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 be eligible for a pension based on the last five years’ average salary.

Tata Motors’ annual report states that it received various requests from current and former employees to extend pension benefits. To avoid prolonged litigation and serve stakeholders’ best interests, the company accepted and approved the joint options on the EPFO portal, agreeing to fund the additional liability estimated through actuarial valuation. A provision of ₹691.07 crore was made during the nine months ended December 31, 2023, disclosed as an exceptional item.

The EPFO, however, redirected all joint applications to the company’s pension trust, prompting Tata Motors to file a writ petition in the Delhi High Court. The company seeks directives for the EPFO to administer its pension fund and accept the joint applications. Trade unions have also filed a petition to expedite the pension fund transfer and accept employees’ joint applications.

The case is scheduled for a hearing on August 8.

On July 9, the Delhi HC directed the EPFO to file an affidavit within two weeks and asked Tata Motors’ counsel to respond within a week. A government official stated that the EPFO’s counsel requested two weeks to file a counter affidavit. The labour ministry, also a party to the case, has yet to respond.