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The central government has made significant changes to the rules for companies running private PF trusts. The Central Board of Trustees of the Employees’ Provident Fund Organization (EPFO) has approved new provisions aimed at making monitoring more effective and…

EPFO New Rules: The central government has made significant changes to the rules for companies running private PF trusts. The Central Board of Trustees of the Employees’ Provident Fund Organization (EPFO) has approved new provisions aimed at making monitoring more effective and protecting the interests of employees. According to the new rules, no exempted PF trust will be able to pay interest more than 2 percent above the annual interest rate declared by the EPFO.

Audit exemptions
Under the new rules, mandatory annual audits for all companies will no longer be required. Instead, a risk-based monitoring system will be implemented, meaning only trusts that are suspected of violating regulations or have financial risks will be inspected. Companies that comply with the regulations will be exempt from frequent audits.

The government has also set limits on the interest paid by PF trusts. No trust will be able to pay more than 2 percent above the EPFO’s stated interest rate. The official explained, “This decision was taken to maintain financial prudence and prevent excessive returns. In some cases, trusts were offering excessive returns when the number of members declined, which increased the risk of financial imbalance.”

The new provisions also cover matters related to corporate mergers and acquisitions (M&A). Now, in the event of a merger or sale, a company’s exemption status under the EPFO will no longer automatically expire. This will ensure business stability and continuity in employee PF management.

How many companies run PF Trust?
There are approximately 1,000 to 1,200 large companies, public sector undertakings, and private institutions in the country that are exempt from the EPFO. These institutions manage their own PF trusts under Section 17 of the EPF Act, 1952. However, they are required to provide employees with benefits equal to or better than those provided by the EPFO.

A public notice will have to be issued on the closure of the trust.
The government has also clarified that if a company wishes to close its trust, it must issue a public notice. Furthermore, it will be mandatory to transfer inactive or non-KYC accounts to the EPFO. The government states that these changes will increase transparency, facilitate business, and better protect the interests of employees.

PC : Punjab Kesari