The central government is thinking about divesting Employees’ Provident Fund Organisation (EPFO) of its regulatory powers. A new regulatory entity might be formed to regulate Employee Provident Fund (EPF). The move aims to avoid conflict of interest generated because of EPFO being the largest provident fund provider as well the regulator in the country, stated a Financial Express report.
The FE report cited the official sources saying that the labour ministry has already begun working on the proposal suggested by the finance ministry though, any changes in the existing rules and provisions will require Parliamentary approval. As of now, EPFO administers the implementation of the Employees Provident Fund & Miscellaneous Provisions Act, 1952 and also provides services to about six crore beneficiaries across the country.
Any employee who earns less than Rs 15,000 per month in a company that has a minimum of 20 employees, is covered under the mandatory EPF cover. EPFO can punish entities that do not comply with the Act. Finance ministry believes that since EPFO plays dual roles, it generates a conflict of interest and this why bifurcation is necessary between PF provider and regulator.
It may be noted that PF of private companies, PSUs and other private organisations, comes under EPFO. Some trusts manage the retirement fund for those who are exempted or excluded from the mandatory PF scheme. Organisations which come under exempted category are not allowed to maintain a trust which is set up by that organisation. For the excluded category, provident fund of any particular industry is regulated by the particular ministry.
Sources told the financial daily that the department of financial services suggested that there is a need to regulate all the unregulated fund trust so that pension of subscribers can be optimised. Various government departments of EPFO have agreed that EPFO solely should regulate all PF trusts.
Source: Times Now News