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Section 157: Special provisions for existing provident fund trusts

The Code on Social Security, 2020 (Act No. 36 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter XIV: Miscellaneous
Competent Labour Forum
Act No. 36 of 2020
Section 156 All 163 Sections of Code on Social Security, 2020 Section 158

Legal Commentary & Landmark Judgments: Section 157

Section 157 of the Code enacts special transitional provisions for existing provident fund trusts, providing that exempted PF trusts operating under the repealed Employees' Provident Funds Act, 1952 shall be deemed to be approved trusts under the Code.

  • Grandfathering of Existing Exempted PF Trusts: Confers automatic transitional approval on private provident fund trusts lawfully established under Section 17 of the repealed EPF Act, 1952.
  • Mandatory Compliance with Code Trust Governance: Requires grandfathered trusts to align their trust deeds, audit cycles, and investment portfolios with the new Code regulations within the prescribed transitional window.
  • Immediate Revocation for Yield Underperformance: Provides that if an exempted trust fails to credit interest to members at the rate declared by the Central Board, the exemption shall be cancelled immediately and all funds transferred to the EPFO.
Key Landmark Precedents:
  • Regional Provident Fund Commissioner v. Hooghly Mills Co. Ltd. (2012) 2 SCC 489: Supreme Court held that exempted PF trusts are held to the highest standard of fiduciary duty and must match statutory benefits without fail.
  • Organo Chemical Industries v. Union of India (1979) 4 SCC 573: Affirmed that private trusts managing worker retirement savings are public trusts subject to continuous statutory regulation.
  • Bakshish Singh v. Darshan Engineering Works (1994) 1 SCC 9: Affirmed that worker retiral entitlements cannot be placed at market risk through poorly regulated private trusts.
Courtroom Practice & Strategic Litigation Guidance:

Trustees of private PF trusts must review their investment allocations quarterly against the Ministry of Finance investment pattern, ensuring trust yields match the official EPFO interest rate to prevent automatic cancellation under Section 157.

Section 156 All 163 Sections of Code on Social Security, 2020 Section 158