Some
companies have formed their own PF trusts to manage the contributions of
employees instead of sending them to the EPFO. These companies have obtained an exemption from EPFO to enable
them to do this. Hence they are called exempted establishments in EPFO. Private
PF trusts function according to the same rules as the EPF and members are
allotted UANs (Universal Account Numbers). But passbook of employees
of exempted trust is not available on the EPF website/Umang. There are more than 1000 such companies
in India large companies like TCS, Wipro, Hindustan Unilever (HUL), Reliance
and public sector organisations like Bharat Heavy Electricals (BHEL).
This article talks about EPF private trust, How to find if your
Company runs EPF trust, Talks about features of EPF Private Trust,EPF Private Trust and UAN,
Transfer from EPF Private trust to Unexempted EPFO ie Regional EPFO.
EPF Trust or EPF
Exempted Establishments
As we know the
Employees Provident Fund actually consists of EPF,EPS(Employee Pension
Scheme) and Insurance EDLIS(Employees
Deposit Linked Insurance Scheme). Distribution to EPF,EPS and EDLI remains the
same for exempt and unexempt as shown in the table below. Our article Basics of Employee Provident Fund: EPF, EPS, EDLIS explains
it in detail.
The Government has
permitted employers/companies to establish and manage their own private PF
schemes, subject to certain conditions prescribed under the Employees Provident
Funds and Miscellaneous Provisions Act, 1952. These trusts are
regulated by the Employees’ Provident Fund Organisation (EPFO). These private EPF trusts
are required to seek approval under the Income-tax Act, 1961 for employees
to get tax benefits. There are over 1,500 private Provident Fund (PF)
trusts, with an estimated corpus of Rs 1 lakh crores and a membership of 50
lakh employees, which are managing the accounts as well as retirement fund of
their workers. Companies like Infosys,TCS, Accenture have their Private PF
Trust.
Employee of Company
with EPF Exempted Trust
An
employee working in company with EPF Trust has to realise that
·
Though the employees of companies with EPF trust are allotted
UAN and Provident Fund number or Member Id. They have limited use of UAN
website. They cannot do the online withdrawal from UAN website.
·
The employees of companies with EPF trust cannot see their passbook
on EPF website with PF and Pension amount on the epf website as the employer or
Private Trust does not deposit money to EPFO. The Company provides them with
this information through payslips, company own website.
·
If an employee has an EPF account with exempted or unexempted
organization then he can transfer this account to Trust on joining a company
with EPF Trust.
·
If the employee leaves the company which has EPF trust he needs
to withdraw only from the company which maintains the trust.
·
If the employee joins another company then he can transfer his
PF from EPF trust to another EPF trust or to EPFO depending on his new
employer.
Roles and
Responsibility of EPF Exempted Trust
EPF Private trusts are
formed by firms that manage the provident fund and PF accounts of their workers
themselves.The members of these trusts enjoy income tax and other benefits at
par with EPFO subscribers. The PF Trust may frame their own rules and regulations
for the maintenance of PF accounts but such rules and regulations are supposed
to be based on relevant PF rules.
·
Such companies
who seek exemptions and create EPF Private Trusts are called exempted
establishment.
·
About 1,500 companies
have been granted exemption by EPFO to maintain their own EPF trusts such
as Infosys, TCS, BOSTON CONSULTING GROUP (I) PVT LTD
·
EPF Trusts opens and maintains PF accounts of the
employees.
·
The employees of companies with EPF trust are allotted UAN and
Provident Fund number or Member Id.
·
It has to give
interest to the members at rate declared by the EPFO every financial year.
·
However, the pension
or EPS is payable only by the EPFO. So EPS still needs to be submitted to EPFO.
·
EDLI may be continued
with EPFO. If the employer provides equal or better benefits, the exemption may
be granted in lieu of EDLI also.
·
Pays administrative
charge of 0.18% instead of regular 1.1 %. This 0.18% charge is to be remitted
as inspection charges.
·
Issues annual accounts
information to the members.
·
Disburse the amount of
PF accumulations to the members on death, retirement, resignation etc.
·
Pay the Deposit Linked
Insurance benefits to the members’ nominees in the event of the death of the
members.
·
Submit periodical
returns/report to the EPFO for the accounts maintained by it.
Why do companies go
for EPF Private Trust?
·
The private EPF
Trust seems to be more appealing as money remains with the in-house trust
formed by the employer.
·
Many of these
companies have a large number of employees(ex Infosys, TCS) so it becomes
easier and faster for EPF trust to handle settlement of employees claims
on retirement/ resignation faster.
EPF Trust and EPF, EPF
Contributions
Distribution
to EPF,EPS and EDLI remains the same for exempt and unexempt as shown in
the table below
|
Scheme Name |
Employee
contribution |
Employer
contribution |
|
Employee provident fund |
12% |
3.67% |
|
Employees’ Pension scheme |
0 |
8.33% |
|
Employees Deposit linked insurance |
0 |
0.5% |
|
EPF Administrative charges |
0 |
1.1% for Unexempt 0.18% for Exempt |
|
EDLIS Administrative
charges |
0 |
0.01% |
How to find if your
company is an exempted trust
You need to find Exemption Status. if Exemption Status is unexempted then your EPF
contributions are with Regional EPFO office. If the status is exempted then the
EPFO is maintained by a private trust. Our article
·
Go to http://www.epfindia.gov.in/
·
Click on Our
Services->Employers
·
Click on Establishment Search
·
Find your organization
by entering the Establishment code/ name of the office
·
Enter Captcha
·
Click on Search
·
Select your company
·
Click View Details on the company
·
You will see Validity Status and
Establishment Status
·
If PF status is
exempted as shown in Image below then your EPF money is with your company
trust.
Employer Details as per EPFO
Validity Status
EPF Private Trust and
UAN Number
Just like Employees
who are members of unexempt EPF, Employees Registered With Company Managed
Private Provident Fund Trust get UAN Number. UAN is a 12 digit single account number which is linked
to your provided fund money. It is like PAN number. Please activate your
UAN to verify the EPF details.
UAN
number can be used while transferring. The process of transferring
from/to EPF Private Trust also remains the same as from Unexempted
organization. Now you don’t need to worry about different EPF accounts and
then transfer them when you join a new job. Now each employer will just give
you a member id, and all those member ids will be linked with the same UAN. Our
article FAQ on
UAN number and Change of Job talks of What is Member Id
and how does it differ from UAN number in detail.
Though
UAN number is provided employees of EPF Private Trust cannot see there
balance/passbook online from UAN official website. Such employees have to
depend on their company for providing such details.
EPF
Trust, Exempted Establishments, EPF Balance, Passbook
The
Passbook which shows that company is depositing EPF and EPS amount is not
available on EPF website for employees who work in companies with EPF Trust as
shown in the image below. The company provides its own site or information
about the contributions to EPF Trust.
No EPF passbook for exempted
organization
EPF details of exempted trusts are only available with the
employer.
Employees of such exempted establishments can check their EPF
balance in the following ways:
1.
Check your PF slip or payslip: Most big
establishments, provide salary slips to their employees via internal emails.
Employees can check their payslips for EPF account balance. Some companies also
give EPF slip in addition to the salary slip. Employees can find their monthly
contributions as well as their EPF account balance in that slip.
2.
Check the company’s employee portal: Most large
companies maintain a company website on which employees can log in and check
their EPF account balance in the EPF section. Wipro and TCS are an example of
such companies that provide the online facility to check one’s EPF account
balance and get PF statement.
3.
Check with the company’s HR/Payrool
department: Employees contact the company’s HR department as it
deals with the employees’ PF and is better able to provide the related details.
EPF
details of Wipro Exempted Trust
Wipro:
employees can view their PF contribution by logging into an internal site
called My Wipro -> MyFinancial->Reports->PF
EPF
details of TCS Exempted Trust
TCS:
In the Ultimatix portal go to my documents column. You can check your PF
balance there.
If
you leave TCS then you can access TCL Alumni portal, https://www.alumniportal.tcs.com/, You can also
download your PF statement from TCS alumni portal. TCS Alumni Portal -> My
Documents -> Download Provident Fund Statement
Transfer
from/to EPF Private trust
When
you change job, your UAN number remains
the same but a new
Member Id is generated for the new employer. The service details
should be reflected in the UAN site.
The
image below gives an overview of how to transfer from EPF Private trust(Exempted)
to Un-exempted EPF(2a) or From Unexempted EPF to Exempted EPF Trust(1b) or from
Exempted to Exempted(3b). The online transfer for PF launched on October
2, 2013, is also available to Private Trusts from Oct 2014. Our article How to Transfer EPF Online on
changing jobs explains it in detail.
From Exempted to Unexempted (2a in image
below) :
·
Apply
Online at EPF website, submit the claim to old Employer(with trust).
·
You
must collect/ensure that you get Annexure-K, Cheque in name of EPFO to
the new employer.
·
After
some days, Check EPF passbook of the new employer.
·
You
should see the amount transferred in, to passbook with the
new employer.
·
Now
you can track the UAN passbook of new member id for further EPF contributions.
From Unexempted EPF to Exempted EPF Trust(1b in the image
below):
·
Apply
Transfer Online at EPF website,
·
submit
the claim to new Employer(with trust).
·
The
new employer should complete the formalities.
·
After
some days, Check EPF passbook of old employer. You should see the amount
transferred out, from passbook with the
old employer.
·
To
track further EPF contributions, you need to contact your new employer with
Trust. As new employer is exempted trust your details will not be available at
UAN website.
From Exempted EPF to Exempted EPF Trust(3b):
·
Apply
Online at EPF website,
·
submit
the claim to old Employer(with trust)
·
You
must collect/ensure that you get Annexure-K, Cheque in the name of the new
company to the new employer.
·
Submit
the Annexure-K, Cheque to the new employer
·
The new employer should complete the
formalities and transfer money from old employer.
·
To
track further EPF contributions, you need to contact your new employer with
Trust. As new employer is exempted trust your details will not be available at
UAN website.
Transfer to or from Exempted EPF
Private Trust to Unexempted EPFO
Transfer
of EPF on changing Job from EPF Exempted Trust to Unexempted EPF
·
·
Go
to the EPFO
members’ portal and log in using your UAN and password.
·
Verify
that all your details are populated in the UAN portal. No missing or incorrect
information.
·
Verify
that your KYC is approved.
·
Click
on Online Services->Transfer
Request.
·
The
Employee has to get his claim attested by the
previous employer (with Exempted Trust).
·
A
PIN will be generated and sent to the registered mobile number.
·
Submit
the claim form to the previous employer
(with Exempted Trust).
·
The
employer should approve the request.
·
Collect
Statement, Annexure K, Letter and Cheque issued to Regional EPFO office
·
You
can check the status of transfer through your member portal account. You would
also get a regular update through SMS.
EPF
Private Trusts are like Cooperative Banks
To show an analogy, EPF Trusts are like Cooperative
Banks while EPFO is like RBI. A cooperative bank is an
institution which is owned by its members. They are the culmination of efforts
of people of same professional or other community which have common and shared
interests, problems and aspirations. They cater to a services like loans,
banking, deposits etc. like commercial banks but widely differ in their values
and governance structures. They are usually democratic set-ups where the board
of members are democratically elected with each member entitled to one vote
each. In India, they are supervised and controlled by the official banking
authorities and thus have to abide by the banking regulations prevalent in the
country, RBI in India.
Now
think of EPFO in place of RBI and EPF Private Trust in place of the cooperative
bank.
Video
on What are EPF Trust of EPF Exempted Establishment
This
9-minute video talks about, What is PF trust? 2. Is there any difference
between members of EPFO and members of PF trust? 3. How to withdraw money from
PF trust of a company? 4. How to transfer PF trust money to another company,
EPFO? 5. How check PF Trust balance?
Video
on How to transfer EPF Trust of EPF Exempted Establishment
This
8-minute video talks about how to transfer from EPF trust, what documents you
need to collect. Remember you need to contact your old
employer as your EPF contributions are with the EPF trust and not EPFO.
EPFO
and EPF Trust
These trusts are regulated by the Employees’ Provident Fund
Organisation (EPFO).
Retirement
fund body EPFO has made it mandatory for private provident fund trusts to file
their returns online every month from April 2014 to improve the monitoring of
these employers. In the e-return, the trusts provide information about
employment in their organisation, contribution towards social security schemes,
investments of funds, audit, financial statement and financial health of the
trust. The EPF website has information about the Exempted Establishments.
EPF
Website provides information about Exempted Establishments as shown in the
image below.
EPF website and Exempted
Establishments
Companies
with private EPF trusts are evaluated periodically on six parameters (100
points for each), such as: full and timely monthly remittances of EPF
accumulations to the private trust; transfer of funds — for example on exit of
employees; efficacy of making investments, the rate of return and settlement of
claims and audit of the private trust’s accounts. he EPFO website has already
put up the ranking of 1,552 companies for Dec 2017, with many firms getting a
perfect score of 600. The image shows the excerpt from PerformaEvaluationtion
of Exempted establishments
EPFO evaluation of exempted
establishments
Overview
of EPF and Types of EPF Funds
Employee Provident Fund (EPF) is implemented
by the Employees Provident Fund Organisation (EPFO) of India. An establishment
with 20 or more workers working in any one of the 180+ industries ( given
here) should register with EPFO. Typically 12% of the
Basic, DA, and cash value of food allowances has to be contributed to the EPF
account. EPFO is a statutory body of the Indian Government under Labour and
Employment Ministry. It is one of the largest social security
organisations in the world in terms of members and volume of financial
transactions undertaken.
As
per the Employees’ Provident Fund & Miscellaneous Provisions Act 1952,
those establishments that recruits 20 or more employees have to covered under
the EPFO act and they have to deduct 12% contribution from Employees
wages/salary(Basic+DA+retaining allowances if any) on monthly basis and it has
to be remitted to EPF fund along with employer equal share.
What is the meaning of Statutory?
Statutory
means controlled or determined by a law or rule.The difference is between
statutory and legal. If something is legal, it is allowed by the law, whereas
if it is statutory, it is regulated by law. It is easier to understand if one
looks at the what is not legal or Statutory. If something is not legal, the law
says you can’t do it. If something is not statutory, there are no laws
regulating it. Example of Statutory warning is : Cigarette
Smoking is Injurious to Health
What is the meaning of exempt?
Exempt
means free from an obligation, duty, or liability to which others are subject.
Types
of EPF Funds
For
an employer, there are three ways he can contribute to Provident Fund of
his Employees if the number of employees is more than 10.
·
One
is to save in an un-exempt fund like the EPF under the EPFO. Un-exempted
firms are those firms which maintain the PF accounts of their workers with
EPFO. There are over five crore active subscribers whose accounts are being
managed by EPFO.
·
Save in
a company-run exempt fund, EPF Private Trust, recognised by the EPFO and which
pays at least the same interest as the EPF. EPF Trust has to do the
duties and responsibilities like EPFO. EPF Private trusts are formed by firms
that manage the money and accounts of their workers themselves and have an
exemption from filing PF returns. The members of these trusts enjoy income tax
and other benefits at par with EPFO subscribers. Such establishments
who seek exemptions and create EPF Private Trusts are called exempted
establishment. However, the pension is
payable only by the EPFO.
·
Put
money in a company-run excluded fund, which is not EPFO regulated, but is set
up with approval from the resident income tax commissioner. This type of fund
looks after all investments and fund management itself and is self-regulated.
How
to start EPF Private Trust?
The
organization has to make an application to the Government, through the
jurisdictional Regional Provident Fund Commissioner, to exempt it from the
operation of the statutory provident fund scheme. The permission to
companies to run their own PF scheme is however subject to a number of
conditions. One of the important conditions relates to guaranteeing a rate of
return on PF accumulations at par with the statutory scheme. If the
government is satisfied that the benefits provided to the employees under the
private provident fund scheme are, on the whole, not less favourable than the
benefits provided in the statutory scheme, then it may permit the entity to run
its own scheme instead of the statutory scheme. The
EPF exemption requirements can be read at EPF page.
A
private scheme can be formulated either for all the employees of the company or
for a specified class of employees (e.g. managerial staff) .The organization is
required to create a board of trustees for governance of the PF scheme and to
ensure an arm’s length transactions between the entity and the trust. The
entity is also liable to make good any loss caused to the trust by fraud,
defalcation, wrong investment etc. The entity has to pay only an inspection
charge of 0.18% of wages rather than the administrative charges of 1.10% of the
wages. Therefore, there is a cost saving of 0.92% of the wages. Multiple units
of an entity can also participate in a common provident fund trust.
