
Private provident fund trusts are in for greater scrutiny. Concerned over the management and performance of these private PF trusts, the labour ministry is planning to undertake verification and audit of all such entities this year.
According to sources, this has been accorded the top priority by the Employees’ Provident Fund Organisation in order to ensure that contributions of members are not misused by these private trusts. “In some cases, it has been found that PF contributions of members have been diverted for other purposes by the company,” a person familiar with the development noted.
Private PF trusts are set up by several India Inc companies to manage the retirement fund contributions of their employees. These trusts are registered under the EPF Act and have to follow all rules and regulations, including the investment pattern prescribed under the Act, but have to pay an interest rate which is not lesser than the declared rate. The benefit often is that private PF trusts are able to give better returns to their members and are often seen to be better managed.
However, this is not always the case and, in the past, the EPFO has cancelled licenses of several such private PF trusts for defaults. As of October 2024, there were 1,276 exempted PF trusts. These are regularly monitored by the EPF and are subject to periodic checks.
Meanwhile, in a move that is expected to help subscribers, the EPFO has now introduced enhanced digital services for Universal Account Number (UAN) allotment and activation using face authentication.
Under the new process, and employee or a new employer can directly generate the UAN using Aadhaar Face Authentication Technology (FAT) using the Umang Mobile App. Members who already have a UAN but have not yet activated, can also now easily activate their UAN through the UMANG App.
At present, UANs are mainly generated by employers by submitting data of employee (member) to EPFO. Though this data is validated using Aadhaar data, many errors were made in other fields such as father’s name or mobile number. As a result, many employees had to update their data while submitting claims or for other benefits. Further, UAN activation through Aadhaar OTP validation on EPFO Member portal was a separate process to be completed by the member causing confusion.
According to labour ministry data, in the financial year 2024-25, as many as 1.26 crore UANs were allotted by the EPFO but only 35.3% or 44.68 lakh were activated by members. “Several reminders were given to employers to get employees to activate their UAN using Aadhaar OTP so that in future any benefit under the Employment Linked Scheme could be potentially provided using DBT,” it said in a statement.
“Biometric authentication using Face Authentication provides a higher level of security compared to traditional methods such as demographic or OTP-based authentication. It ensures accurate and tamper-proof identity verification at the very entry point into the EPFO system,” said the ministry.
In coming days, EPFO will also promote digital life certificate through Jeevan Pramaan using the Face Authentication Technology by collaborating with youth volunteers from MY Bharat to provide services to pensioners at their doorstep.