A provident fund is a system for managing retirement savings mandated by law and to which employers and employees are obligated to contribute regularly. This fund is intended to assist workers financially if they cannot work.
What is exempted PF trust? Employers set up Exempted PF Trust to manage their employees’ provident fund accounts. In 1952, the PF Trust was founded by the Employees’ Provident Funds and Miscellaneous Provisions Act. The Employees’ Provident Fund (EPF) is a mandatory retirement savings scheme for all companies with twenty or more workers. So, let’s learn more about what is exempted trust in PFand much more in the article below.
Exempted PF Contributions
A PF trust is run independently by more than a thousand Indian companies. Private or tax-exempt PF trusts function similarly to the EPF. It issues UANs to members per the same standards as the EPF.
12% of an employee’s salary (base plus dearness allowance) goes to the Exempted PF Trust, the same percentage that goes to the Employees’ Provident Fund (EPF). The Employee Pension Scheme (EPS) receives 8.33% of its funding from employers. It is EPS, not the EPFO that oversees the exempted PF trust or unexempted.
The inspection cost for exempted PF trust or unexempted member is merely 0.18 percent, whereas the administration charge for an EPF member is around 1.1%. In the long run, this could wind up being more economical. Being responsible for employee contributions, PF trusts must pay the EPFO the same or a higher interest rate.
Withdrawal from Exempted PF
How to withdraw PF from exempted trust online? You can take 75% of your funds during the first 30 days after being laid off, followed by 25% within the second 30 days. One may apply for a pension comparable to the Employees’ Pension Scheme (EPS) even after age 58. The EPFO is responsible for disbursing this pension.
You can transfer your money to another exempted PF firm if you decide to quit or switch from your existing one. You may send your money to the EPFO or a regular EPF-registered company. You will be considered unemployed if you choose to work in the informal economy or as a self-employed individual. After being out of work for two months, you can either withdraw or leave your balance alone.
Rating of Exempted PF
The EPFO requires private PF trusts to provide data every month. The evaluation and grading of these outcomes is the responsibility of the EPFO. The EPFO assigns a score to an exempted PF based on six factors:
- Transfer of Provident Fund in Time
- Investment of Funds in Time
- Remittance of Funds to the Trust
- Interest Declared at or Above the PF Rate
- Settlement of Claims Within 20 Days
- Audit
Benefits of Exempted PF
An Exempted Provident Fund (EPF) is a kind of provident fund plan managed by a trust specifically set up to receive and distribute contributions from employees. The EPFO is the Indian agency responsible for overseeing provident funds. To establish these trusts, employers may need their approval. The benefits of an exempted PF are as follows:
Flexible Approach
In contrast to the traditional EPF managed by EPFO, exempted PF trusts have more discretion over the distribution of the accumulated funds. Various financial assets, including stocks, bonds, and more, are available to the trust for investment, depending on its investing philosophy.
Customization
An exempted PF trust’s provident fund plan could be tailored to meet the corporation’s and its employees’ specific needs and preferences. This can include additional qualifying conditions, higher interest rates, and other benefits.
Maximized Earnings
Due to their more investment freedom, exempted PF trusts have a higher probability of providing higher returns than the EPFO-managed EPF. Workers could have more disposable income to put toward retirement if this does place.
Less Dependence on the Government
Employers taking charge of the trust reduces the burden on the government to oversee payments to the provident fund. This may lead to more efficient management and quicker decision-making.
Advancements in Transparency
There may be greater transparency in the reporting and managing of funds with exempted PF trusts compared to EPFO-managed EPFs. Information on contributions to and withdrawals from employees’ provident funds may soon be more readily available.
Personalized Benefits
Employers might modify the provident fund scheme by adding benefits and features that workers need. Some examples of what this might provide are insurance, additional donations, or various withdrawal options.
Viewing the Balance of an Exempted PF Trust
To check the funds in an exempted PF trust, you may often do the following:
- If you need assistance with the provident fund (PF), the ideal person to contact is the HR department at your workplace. You may ask them for directions to your exempted PF trust funds.
- Your PF balance may be seen by providing personal details, including your PF account number or employee ID.
- Many firms provide online portals or mobile apps where employees may see their PF balance, get statements, and track contributions. You could have received the necessary access credentials for the site from the HR department.
- You may see information about your PF contributions for a certain pay period on your payslips, and it is normal practice to have PF payments deducted from your paycheck. In this technique, you may roughly calculate your PF balance.
- Contact the PF trust directly to know how much money is in your PF account. This step can be essential if your company has hired an outside entity to manage the PF trust.
- It is common practice to provide an annual statement to employees of exempted PF trusts outlining the total amount of their contributions and the current balance of their PF account. You may use these statements to track your PF balance.
PF Transfer from Unexempted to Exempted
Start by going to the EPFO website and entering your UAN Number into the corresponding area. Members must use the online services option to request a transfer from their EPF account. You may also check the legitimacy of statements using the internet. To check on the progress of your claim, go to the online services menu and click on Track Claim Status. Transferring funds from one employer to another takes place quickly, usually within a few days. You won’t be able to access your funds on the UAN website until they’re moved to the approved institution.
Details Required to Transfer
These details are often needed if you transfer your PF balance from one employer to another or from the Employees’ Provident Fund Organization (EPFO) to an exempted PF trust:
- Your PF account has a unique identifier: the number you were given. Without it, the transfer operation cannot be initiated.
- An Individual Number, or Universal Account Number, is assigned to each Employee Provident Fund member (EPF) member. It won’t change no matter how many jobs you have in a given career. With this number, monitoring and transferring your PF contributions may be easier.
- Your name, date of birth, father’s name, and contact information should match the data the EPFO or the exempted PF trust keeps.
- The previous employer’s name, address, establishment number, and the state in which their PF office is located must be provided when transferring a PF balance from one employer to another.
- Suppose you transfer your PF balance to your employer’s exempted PF trust. In that case, you will need to provide facts such as the name and location of your employer, their establishment number, and the details of the trust, if applicable.
- Provide the details of the bank account, including the account number, to which you would want the transferred PF amount to be credited.
- Fill out Form 13 (Transfer Claim Form) to transfer the money from one PF account to another. You may be required to submit this form to your current employer or the EPFO, depending on the circumstances of your transfer.
- You may request a transfer claim form and any other necessary papers to validate the transfer request.
FAQ’s:-
Initiating a withdrawal from an account maintained in the PF trust requires contacting your company’s HR department.
Your EPF passbook and online withdrawal requests will remain inaccessible even after obtaining a UAN if your PF trust is not one of the eligible ones. You may review your pay stubs or contact your company’s human resources department to see your contribution amount.
Unlike the EPFO, an Exempted PF Trust allows an employer to independently manage and administer the provident fund contributions of their employees.
The employer typically manages an Exempted PF Trust, either independently or with the assistance of a board of trustees appointed for this purpose.
Employees become members of an Exempted PF Trust by virtue of their employment with the organization that manages the trust.
In some cases, employees may have the option to choose between the Exempted PF Trust and the EPFO. However, this depends on the rules and policies set by the employer.