Home / Politics / Policy /  Parliamentary panel asks government, EPFO to frame stringent rules for PF trusts

New Delhi: The parliamentary panel on labour Tuesday asked the government and the Employees Provident Fund Organization (EPFO) to frame stringent rules for monitoring the exempted establishments or companies who run their own provident fund trusts.

The committee headed by Lok Sabha MP Kirit Somaiya said in a report tabled on Tuesday that 118 exempted trusts had a total corpus of less than 1 crore each and the last return filed by them were in 2014 and 2015.

The committee said these establishments may not have taken any steps to benefit their subscribers and recommended in the report that “strong guidelines for grant of exemption may be made which make it mandatory to take into account past performance, net worth, group performance as well as minimum strength of workers, collections, contributions and corpus of the company/establishment."

There are nearly 3,000 exempted establishments who manage the PF corpus of their employees by themselves. Such establishments have a cumulative corpus of over 2 trillion. Though exempted trusts manage their own PF corpus, they generally are expected to function under the overarching rules of the EPFO.

The panel said that as of now, there were no clear guidelines on whether such establishments can keep unclaimed PF money with them and feared that these firms may be using it as their working capital. The committee suggested that there is need for a strong audit mechanism even though the government had told the committee that they have not found any establishment using such money as working capital.

“The ministry must put in place a deterrent mechanism well in time to keep tab on such errant establishments along with appropriate use of the provision for imposing stringent penalty on them, which would act as a deterrent for the future. The committee would also like to be apprised of the progress achieved herein," the panel said.

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