Does Your Employer Manage Private PF Trust: Here's What You Should Know?

The EPF or Employees' Provident Scheme was worked out in the year 1952 by the government of India to ensure social security for workers in both the organized and unorganized sector. While majority of the companies are required to contribute to the Employees' Provident Fund Organisation (EPFO) trust towards the EPF fund, several other companies are exempted from this requirement and instead manage their own in-house or private PF trust.

Private or in-house PF trust

At present, there are over 1500 companies that manage their own provident fund trust after the government has allowed them exemption from contributing to the EPFO trusts. And in the list are included large corporates such as SAIL, Nestle India, HDFC etc. These companies operate and manage their PF trust in-house as they consider it to be more employee-friendly. Also, some of the companies take pride in running their own PF trusts as they through their investment allocation in mutual funds and government securities were able to provide better returns to employees in comparison to return generated through EPFO.

Cost factor i.e. involved in managing funds also makes some of the companies' to adopt the private PF trust model as inspection charges of 0.18% apply in case of private trust as against 0.5% administration charges that are levied in case of companies that go by the EPFO- administered model.

From the employees' perspective, private PF trusts provide them leeway by allowing them to secure advance against the PF account or withdraw funds early from the account.

Rights of Employees employed with an employer managing private PF trusts

1. Last year, the ministry of labour directed as many as 1500 private firms running private PF trusts to ensure that the rate of interest declared on employee provident fund is on a par or higher than the rate declared by the EPFO. So in case you are employed with such a firm, rest assured to get the tax-free return on your EPF kitty at par with that declared by EPFO from time to time.

2. For any grievance redressal such as when you as a salaried class face the situation wherein your employer does not makes the mandated contribution to your EPF account or does not credits interest on it, you can report it to the HR or the finance department or in particular to the PF trustee listing out the discrepancy. Your complaint is likely to be swiftly addressed as for any such non-compliance, managing director of the firm is held liable.

3. In a case when you aren't satisfied with the redressal meted out by the trustee, you can still escalate the issue with the Regional Provident Fund Commissioner. But before approaching the higher authorities, do ensure that the matter you are raising is truly contentious in nature and just due to some delay or clerical error. On non-resolution of the problem, you can still approach the ministry of labour and employment's chief vigilance officer.

4. Employees also have the option to raise the matter with the EPFO online against their employer but for it they need to provide the UAN or universal account number which is mandatory even for employees employed with the employer managing private PF trust. The protocol suggests resolution of such a complaint in a month's time.

5. Also, where the funds have been deducted from the employee's salary towards the PF kitty but not remitted, a police complaint u/s 405 of the Indian Penal Code for criminal breach of trust can be filed.

Do note while EPFO is doing its bit by putting across guidelines for such exempted firms that run their own PF trust such as mandatory filing of PF returns month on month as well as checking and evaluating their performance in respect of fund transfer before the due date, interest paid, remittance to the trust etc., you also need to keep a close eye on your salary slip as well as the PF statement to avoid any wrongful doing by such privately-run PF trusts.