A big question about the Employees’ Provident Fund (PF) is that some companies do not deposit PF directly with the EPFO (Employees’ Provident Fund Organisation). Instead, they manage it on their own. These companies actually get permission (called exemption) from the EPFO to do this. Now the question is — why are these companies given this exemption? Do they give more interest than EPFO? And what impact does this have on the safety of the employees’ money?

What is Exempted Establishment and Why Some Companies Are Exempted?

Some companies do not give PF money to EPFO. They manage it by their own trust. These companies are called Exempted Establishments. They need special permission from the Central PF Commissioner for this.

The company gets this permission only if it can give the same or more interest than EPFO. The company must also make sure the money is safe, the process is clear, and work is done on time.

It is a rule that the company must give at least the same interest as EPFO. If it gives less, it must pay the extra amount from its own side. EPFO gives more than 8% interest every year. Right now, it gives 8.25%. So, it is not easy for companies to run their own PF trust.

Good and Bad for Employees

If the company manages the PF money, some things can be better for employees. For example, PF claim or loan can be done faster. Some companies also give better service or even bonus money. Sometimes the interest is more than EPFO.

But there are also problems. The money is safe only if the company is honest. If the company closes or does something wrong, employees can lose their money. Also, the company trust is not checked as strictly as EPFO.

EPFO checks these trusts every year. If the company breaks rules, it can lose the exemption. Then it must give PF to EPFO again. EPFO also checks if interest is given on time.

More than 1,500 companies in India have this permission. Some big names are ONGC, BHEL, and SBI. They run their PF trusts for many years.

Be Careful with Trusts

If the company follows all rules, the trust is safe. But employees must still be careful. Check your PF passbook, interest rate, and audit reports. This will help you stay safe from fraud or loss.