Companies managing provident fund accumulations of their employees in-house may soon have to hand over the entire corpus to employees' provident fund organisation, or EPFO, as government looks for ways to ensure retirement saving of workers are protected. 

The Central Board of Trustees, the EPFO's top decision making body, has endorsed a proposal that trusts be allowed to only manage EPF accounts and not funds. 

There are hundreds of organisations that turn sick and are not in a position to pay their workers' PF dues, labour secretary P C Chaturvedi said. 

"The new provision would ensure that workers' money is safe in such cases," he said. 

The labour ministry will prepare a Cabinet note for amending the EPF Act which will finally be placed before Parliament. 

"As per the proposed amendment, exempted trusts will only manage PF accounts and every month deposit surplus funds that is left after settlement of claims with the EPFO," Chaturvedi said. 

Under the current rules, companies meeting certain eligibility conditions are allowed to set up trusts to manage the provident fund contributions of their employees subject to stiff rules. 

There are more than 2000 exempted establishments that manage their own EPF accounts with an estimated 48 lakh subscribers and a corpus of over Rs 1 lakh crore. 

If the new rule is approved, once the amendment is brought about, exempted trusts cannot invest workers PF money and EPFO would make all investments, leaving the trusts to manage only the account details of the employees. 

Workers' representatives welcomed the proposal. 

"This is certainly a progressive step because private trusts were not doing justice to worker's funds and not making appropriate investments," said Sankar Saha from the All India Trade Union Congress ( AITUC )). 

The CBT also decided to extend the deadline for appointment of new fund managers to August 31, and allowSBI to continue as an interim fund manager till that time. The EPFO hopes to complete the process by the end of July. The CBT gave its nod to the proposal of appointing a custodian for EPFO securities, separate from the fund managers. 

Source: Economic Times.