Exempted PF Trusts: Are They Better Than EPFO?

Exempted PF Trusts: Some companies opt to manage their own Provident Fund services instead of utilizing the EPFO. These are termed Exempted PF Trusts.

Contributions: Firms such as Hindustan Unilever, TCS, and BHEL operate their PF trusts in alignment with EPF norms, providing a Universal Account Number (UAN). Both employers and employees contribute 12% of the salary (basic salary + dearness allowance). From the employer's share, 8.33% is allocated to the EPS via the EPFO. Unlike the EPF's 1.1% management fee, exempted trusts only incur a 0.18% inspection fee, potentially reducing costs. These trusts are required to offer competitive interest rates that are at least equal to or exceed the EPFO rates.

Trust Ratings: Exempted PF Trusts must submit monthly returns to the EPFO and are evaluated on six parameters, such as prompt fund transfers, correct interest declarations, and swift claim processing.

Withdrawal Process: Members may withdraw 75% of their EPF balance following one month of unemployment and the remaining 25% after two months. Pension payments continue under the EPFO.

Transfer Process: The balance transfer process remains straightforward between Exempted PF Trusts or when shifting from a trust to a company registered under EPF. Unemployed individuals can withdraw their balances after two months, although interest from their previous company's balance may be subject to taxes.

Benefits: Membership in Exempted PF Trusts presents lower administrative fees (0.18%), competitive returns with potentially higher interest rates, efficient service, and tax benefits up to INR 1,50,000 under Section 80C. However, contributions become taxable if employment does not exceed five years.

Checking Balance: Although members have a UAN, those in exempted trusts cannot view EPF details or initiate withdrawals online. Any balance inquiries should be handled by the company's HR department, with contribution specifics available on salary slips.