Understanding Exempted PF Trusts: 5 Key Benefits Explained



Exempted Trusts in Provident Fund (PF): Some companies in both public and private sectors establish their own PF trusts to manage employee contributions, rather than sending them to the Employees' Provident Fund Organization (EPFO). These companies are known as Exempted PF Trusts.
Contributions to Exempted PF Trusts: Leading Indian companies like Hindustan Unilever, TCS, Reliance, Wipro, and BHEL manage their own PF trusts. These trusts adhere to EPF rules, offering a Universal Account Number (UAN) to members. Both employers and employees contribute 12% of the employee's salary (Basic + Dearness Allowance) to the trust; however, 8.33% of the employer's contribution goes to the Employee Pension Scheme (EPS), governed by the EPFO. Unlike the EPFO, which imposes a 1.1% administration fee, exempted trusts only charge a 0.18% inspection fee, potentially reducing expenses. Trust-managed funds must yield interest rates matching or exceeding those of the EPFO.
Ratings of Exempted PF Trusts: These private PF trusts are required to send monthly reports to the EPFO and are evaluated on various criteria, such as timely fund transfers and investments, quick fund remittances to the trust, declaring interest rates that meet or exceed EPF norms, settling claims within 20 days, and conducting audits.
Withdrawals from an Exempted Trust: In the event of unemployment, you can withdraw 75% of your EPF balance after one month, with the remainder accessible after two months. The EPFO manages pension disbursements.
Transferring PF from an Exempted Trust: Transferring funds between Exempted PF Trusts or to an EPF-registered employer is quite simple. For those transitioning to self-employment or entering the unorganized sector, funds can either be retained with the previous employer or withdrawn after two months. Be aware that interest earned with the prior employer will be taxable.
Benefits of Exempted PF: Members of Exempted PF Trusts gain from a lower administrative charge of 0.18%, possibly better interest rates, enhanced service responsiveness, and enjoy similar tax benefits as EPF under Section 80C. However, tax implications come into play if association with the company ends before five years of service.
Checking Exempted PF Trust Balance: While members receive a UAN, online access to the EPF passbook isn't provided, nor can withdrawal requests be made digitally. Contribution details appear on salary slips, with additional information available from the company's HR department.



