EPF Scheme 2026: New rules for exempted PF trusts, what employees must know
The Employees’ Provident FundScheme, 2026 has introduced a revised framework for exempted provident fund (PF) trusts, bringing in an interest rate ceiling, mandatory digital compliance, stricter governance standards and time-bound exemptions for employers that manage provident fund accounts through their own recognised trusts.
The changes are part of the Employees’ Provident Fund Scheme, 2026, notified by the Ministry of Labour and Employment under the Code on Social Security, 2020. While the new Scheme largely retains the existing framework for provident fund contributions and withdrawals, it also updates the conditions governing exempted establishments that operate their own PF trusts instead of remitting contributions to the Employees’ Provident Fund Organisation (EPFO).
What is an exempted PF trust?
The Scheme allows eligible establishments to seek exemption from the EPF Scheme, subject to specified conditions. Such establishments manage provident fund accumulations through their own recognised PF trusts rather than depositing contributions with the EPFO.
However, exemption is available only if employees continue to receive benefits that are not less favourable than those available under the EPF Scheme. The exempted establishment is also required to comply with the conditions prescribed under the Scheme for retaining the exemption.
Where applicable under the Scheme, a member’s provident fund accumulations may be transferred between exempted trusts or between an exempted trust and the EPFO on a change in employment.
What changes under the EPF Scheme, 2026?
One of the notable provisions in the new Scheme relates to the interest that exempted PF trusts can credit to members.
The notification provides that the annual rate of interest declared by an exempted trust cannot exceed the rate notified by the Central Government under the EPF Scheme by more than 200 basis points, or two percentage points. For instance, if the EPF interest rate notified by the government is 8.25%, an exempted trust cannot declare an interest rate higher than 10.25%.
The Scheme also requires every exempted establishment to constitute a Board of Trustees to administer the provident fund in accordance with the provisions of the Scheme. The Board is responsible for managing the fund, maintaining members’ accounts and ensuring compliance with the applicable rules.
Another major change is the emphasis on digital administration. Exempted PF trusts are required to maintain electronic records, preserve members’ accounts in digital form, issue annual statements of accounts and provide members with electronic access to their provident fund information. Claims for withdrawals, advances and transfers are also required to be processed electronically in the manner specified by the EPFO.
The Scheme further mandates that the accounts of every exempted PF trust must be audited annually by a chartered accountant.
In addition, employers remain responsible for timely deposit of provident fund contributions, meeting the administrative expenses of the trust, making good any loss suffered by the fund and complying with all conditions governing the exemption.
The notification also changes the validity of exemptions. Instead of continuing indefinitely, an exemption will initially remain valid for three years. It may be renewed if the establishment continues to satisfy the prescribed conditions.
The revised framework seeks to strengthen oversight of exempted PF trusts while ensuring that employees covered under such trusts continue to receive provident fund benefits that are not less favourable than those available under the EPF Scheme administered by the EPFO.
