The government may not allow new exempted PF trusts to manage employee funds. Companies with such funds would be allowed only to maintain accounts of their employees, while the EPFO will invest the corpus and offer interests to its subscribers accordingly.
A provision in this regard is likely to come in the EPF Act amendment note that is expected to go for Cabinet approval soon. If approved, the new norm would discourage a lot of companies to opt for exempted trusts.
There are around 2,770 companies including both in private sectors and public sector that have exempted establishments for PF.
According an EPFO official, the rule will not be allowed to the existing set-ups.
“There have been many cases in the past where exempted trusts have expressed their unwillingness to match the interest rates offered by EPFO citing various reasons. If they are given the responsibility of only maintaining the employees’ accounts, there would be no such problems,” a labour ministry official said.
Under this exemption, the companies need not give the money from their employees' provident fund to the EPFO. These trusts can invest the funds on their own and assure a return to their employees accordingly.
The EPF has over 4.71 crore subscribers with a corpus of over R3 lakh crore. Managing the funds of ex empted trusts would raise the corpus significantly. It has appointed SBI, ICICI Sec, RCap and HSBC Asset Management firms to manage corpus.
“The exempted trusts will need not appoint separate fund manager if the amendment is approved. It will be easier for EPFO as there are already companies managing its corpus,” the official said.