EPFO may bring 500 small private PF Trusts into its fold
Retirement fund body EPFO may bring 500 private PF trusts within its fold whose EPF accumulations are around Rs 1 crore each, or have up to 20 members, for offering better services to those subscribers.
Besides, this will improve monitoring of over 1,000 such trusts which have large subscriber base and manage huge EPF accumulations.
The Labour Ministry is in the process of amending Employees' Provident Fund Scheme 1952, so that large private PF trusts having accumulations can carry on the management of their employees' EPF money and accounts.
"After the amendment in the EPF Scheme, the existing private PF trust having up to 20 members or EPF accumulations of around Rs one crore excluding pension and insurance contributions, would lose their exemption from filing EPF returns. Their trust's funds and accounts would be taken over by the Employees' Provident Fund Organisation (EPFO)," a Labour Ministry source said.
The source added that after amendment to the scheme, these small trusts would be exempted from filing EPF returns for a period of 180 days after which they would lose the exemption.
The source further said that only those firms would be eligible to run PF trusts whose employee strength is at least 500 and EPF accumulations of their employees excluding pension and insurance contributions are at least Rs 100 crore in five years period.
The proposal to amend the scheme was approved by the apex decision making body of EPFO, Central Board of Trustees (CBT), headed by the Labour Minister last year.
According to an analysis by the EPFO, there are 1,550 private PF trusts having total subscribers of over 82 lakh employees. These trusts are managing around Rs 3 lakh crore corpus.
Out of these exempted firms or trusts, there are over 500 trusts which are either managing a meagre amount of EPF (up to Rs one crore) or their members are not more than 20.
The EPFO had proposed that since these trusts manage meagre EPF amounts and have few members, they should be taken over by the EPFO for providing host of online and other facilities which they cannot provide to their subscribers.
Earlier, the firms were allowed to operate their own PF trusts so that their employees get better services when accounts and funds were managed manually and the EPFO used to take months to settle claims like EPF withdrawals.
However, as the EPFO is providing a lot of online services like claim settlement, account balance information through SMS, EPF passbook, it would be better that the EPFO manages the money as well as accounts of these small private PF trusts.
The source said, "The kind of prompt services EPFO is providing today cannot be matched by these small trusts with scarce resources."
At present, these trusts provide administrative charges of 0.18 per cent of the basic wages (on which PF contributions is calculated). After the EPFO takes over, they would have to pay 0.65 per cent of basic wages as administrative charges.
The EPFO has a subscriber base of around 4.5 crore and manages a corpus of around Rs 10 lakh crore with annual investible deposits of Rs 1.5 lakh crore.
The move to take over these small trusts is also in line with the suggestion of the Parliamentary Standing Committee on Labour that these should be monitored properly.