The bifurcation has been recommended to avoid conflict of interest since EPFO is both a regulator and a service provider. The government is considering relieving the Employees’ Provident Fund Organisation (EPFO) of its regulatory duties and plans to create a separate entity to handle such functions, The Financial Express reported.
The rationale behind the proposal is to avoid conflict of interest since EPFO is both India’s largest provident fund (PF) provider and a regulator.
The Labour Ministry has already begun working on the division after a suggestion from the Finance Ministry, sources told the paper.
The Finance Ministry suggested that the bifurcation is implemented after identifying and separating regulatory activities from that of the PF provider, the report said.
As per the Employees Provident Fund & Miscellaneous Provisions Act, 1952, the EPFO can penalize firms that don’t follow the Act’s instructions.
The EPFO also acts as a service provider to around six crore beneficiaries throughout India.
Parliamentary approval is required if changes are to be made to the provisions of the Act.
The Financial Services Department has recommended regulation of PF trusts that are excluded from the EPFO’s scope, the report said. At present, certain trusts are allowed to manage retirement funds for exempted and excluded categories.
A consensus needs to be built across various government departments on making the EPFO the regulator for all provident funds, including the exempted and excluded categories, sources told the paper. A standing committee, in a report to the Lok Sabha, had expressed the need to create a regulatory mechanism for all PF trusts. Read Original Post >>