The Ministry of Labour has directed around 1,500 private employee provident fund
trusts to ensure that the rate of interest declared by them is on a par with or higher than that declared by the Employees Provident Fund
Office (EPFO). Employee provident fund
trusts are set up by companies for the administration of employee provident funds
(EPFs). The direction comes after the ministry noted that some private EPF
trusts were not able to declare the rate of interest at par with EPFO.
The circular also stated that there will be periodic evaluation and monthly ranking of companies which have set up such trusts to ensure better compliance. Employees will also have to be promptly intimated within two days when their EPF
account is credited, The Times of India
The periodic evaluations will be based on six parameters like full and timely monthly remittances of EPF
accumulations to the private trust, transfer of funds, efficacy of making investments, the rate of return and settlement of claims, and audit of the private trust's accounts.
"About 1,500 companies have been granted exemption (ie: permission) to maintain their own EPF
trusts. While the declaration of the minimum interest prescribed by the EPFO
and meeting of any deficit by the employer company, are conditions prescribed for running a private EPF
trust, some were not following it. The recent circular on interest rate and prompt communication to employees aims to ensure parity for employees covered by such private trusts," TOI
quoted an official as saying.
Government sources added that stringent action, such as cancellation of the permission given to the private EPF
trust, will be taken for repeated defaults, especially for delays in remittance of money collected from employees or for reduced interest rates.
All the companies employing 20 or more individuals have to provide provident fund
for social security.
In case a company does not opt for its own private provident fund
trust, the employees are directly covered by the fund administered by the EPFO. EPFO
communicates remittances made to the accounts of employees via UMANG mobile app e-passbook.