EPFO has made important changes in the rules for private trusts. Making the rules stricter for private trusts, EPFO has issued a new SOP (Standard Operating Procedure). According to the new SOP, over 1,250 private trusts, which manage savings of over Rs 3.50 lakh crore of about 32 lakh employees, will have to offer their employees benefits “better or at least equal” to the terms offered by the Employees’ Provident Fund Organization (EPFO).
What are private trusts?
According to a Mint report, a senior official said that if any private trust does not follow the rules, its exempt status will be cancelled. Private or exempted institutions are companies that manage their own private provident fund (PF) trusts instead of depositing employees’ contributions into the central fund of EPFO. These can be both public and private sector companies.
New SOP gets approval from Central Board of Trustees of EPFO
The official said the new and simplified SOP for exemption has been approved by the Central Board of Trustees (CBT) of EPFO, which is headed by Labor Minister Mansukh Mandaviya. He further said that the new SOP will integrate the existing four SOPs and exemption manuals into a single comprehensive framework, to reduce the compliance burden and promote ease of living.
Money deposited in inactive accounts will have to be transferred to EPFO
The document said the new SOP “reiterates and emphasizes that the benefits offered by the exempted institution should be better than or at least equal to the benefits offered by the EPFO,” and for the safety of members, the balance in inactive accounts and accounts without KYC will have to be transferred to the EPFO along with the interest accrued.
Ban imposed on paying arbitrary interest
The new rule has also banned private trusts from paying arbitrary interest to their members and capped it at a maximum of 2%. “To maintain parity between generations, the higher interest rate has been kept at 200 basis points above the EPFO interest rate,” the SOP said. The official quoted above said that this provision has been added because some public sector companies were found to be paying high interest of 30-34% to their employees.
Names of big companies among the institutions getting exemption
According to the EPFO listing for August 2024, some of the institutions getting the exemption include Bokaro Steel, Jindal Stainless, TVS Motor Company, Raymond Ltd, Larsen & Toubro Ltd, Wipro, Infosys, Tata Tea Ltd, Reliance Industries Ltd, BHEL, Hindustan Unilever, Hindustan Petroleum Corporation Ltd, Indian Oil Corporation Ltd, Bharat Petroleum Corporation Ltd and NTPC Ltd.
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