Discuss how the Code on Social Security, 2020 changes the regulation of exempted provident fund establishments. What transitional challenges does it raise?

The Code on Social Security (CoSS), 2020 [2] replaces the EPF&MP Act, 1952. Some establishments run their own in-house PF Trusts instead of depositing with EPFO. The power to exempt them now sits in Section 143 of the Code instead of Section 17 of the 1952 Act [1]. The shift tightens oversight of 1,002 exempted establishments managing about ₹3.52 lakh crore for over 31 lakh members [4]. However, cleaning up older trusts that were never properly approved is proving difficult.

Changes in Regulation

• New legal base: Exemption is now governed by s.143, applied through the EPF Scheme 2026, notified on 29 June 2026 [1].
• Codified entry filters: A minimum headcount, a minimum corpus size and a three-year compliance record [1] screen out trusts too small or too new to run a PF.
• Easier exit: The simplified SOP approved at the 239th CBT meeting merges four SOPs and the Exemption Manual into one. It allows digital surrender and transfer of past savings to EPFO [6]. In two years, 27 establishments surrendered exemption, adding ₹1,688.82 crore to the EPFO fund [4].
• Inter-agency enforcement: EPFO and the Income Tax Department share data to identify non-compliant trusts [1].

Transitional Challenges

• Legacy grey zone: Some trusts are recognised under the Income Tax Act but have no labour-law exemption order. A one-time Amnesty valid until 28 December 2026 regularises them retrospectively [1].
• Moral hazard: The Amnesty waives the headcount, corpus and three-year rules [1]. It therefore admits the very trusts these filters were meant to keep out, and rewards past non-compliance.
• Governance risk: The CAG (2013) found that employers had not deposited ₹129.20 crore with their own trusts, and that 249 exempted trusts had not invested ₹299.78 crore as required [3].
• Regulatory gap: Trusts under the PF Act, 1925 have no single regulator. The Standing Committee on Labour (2018) recommended making EPFO the sole regulator [5].
• Capacity and uptake: Take-up has been slow. EPFO needed nationwide outreach with CII, ICAI and BSE and officer training at PDUNASS [1].

The Code turns exemption from a loosely checked privilege into a conditional, digitally monitored status. However, the shift from the old law to the new one risks diluting its safeguards. EPFO should treat the Amnesty deadline as final and audit new entrants closely for deposit and investment lapses. The government should also act on the Committee's sole-regulator recommendation. Done this way, the Code will protect workers' retirement savings and advance SDG 1.3 on social protection systems.