Welcome

Presentation on

Provident Funds
for Workers in
Private Sectors
Establishments

TOPICS TO BE COVERED

1.
2.
3.
4.
5.
6.

Introduction
Scope
Steps of PF establishment
Applicability of Fund
Establishment criteria
Administration and Management of the
Fund
7. Eligibility of Contribution to the Fund
8. Contribution to the Fund
9. Investment Scope

TOPICS TO BE COVERED
10. Recognition Merits
11. Recognition demerits
12. Audit of the accounts of the Fund
13.
Expenses for maintenance, Audit
and Accounts of the Fund
14. Works to be performed after
formation

1. INTRODUCTION
P r o v i d e n t Fu n d i s a t e r m f o r
pension fund/savings scheme.
A provident fund is a form of
s o c i a l s a f e t y i n t o w h i c h w o r ke r s
must contribute a portion of their
salaries
and
employers
must
contribute on behalf of their
w o r ke r s .
The money in the fund is then
paid out to retirees, or in some

2. SCOPE:
The following Act, Law,
O r d i n a n c e & Ru l e s w i l l a p p l i c a b l e
f o r t h e Fu n d :

B a n g l a d e s h L a b o r L a w , 2 0 0 6
I n c o m e Ta x o r d i n a n c e , 1 9 8 4
I n c o m e Ta x Ru l e s , 1 9 8 4
C o m p a n i e s A c t , 1 9 9 4
Tr u s t s A c t , 1 8 8 2
S e c u r i t i e s A c t , 1 9 2 0 .

3. STEPS OF PF ESTABLISHMENT:
Re s o l u t i o n o f t h e B o a r d o f
directors;
Selection of the name of the
fund;
Selection of the Board of
Tr u s t e e s a n d o t h e r p r o v i s i o n s
f o r p r e p a r i n g Ru l e s o f t h e f u n d s ;
Drafting deed and rules of the
fund;
Notarization of deed and rules
of the fund;
Apply for recognition form NBR

4. APPLICABILITY OF FUND (BANGLADESH

LABOR LAW, 2006 SECTION 264):
An establishment in a private sector
m a y , f o r t h e w e l f a re o f i t s w o r ke r s ,
constitute a provident fund.
An establishment in the private sector
shall constitute a provident fund for
t h e b e n e fi t o f i t s w o r k e r s , i f t h r e e f o u r t h s o f t h e to t a l n u m b e r o f w o r ke r s
employed in it so demand by an
application in writing.
Note
that
as
establishment
constituting a provident fund shall be
deemed to be a public institution for

5. ESTABLISHMENT CRITERIA:
Th e go ve rnm en t m ay ma ke rul e s fo r
constitution of provident
fund for
w o r ke r s i n p r i v a t e s e c t o r ;
Fu n d s h a l l b e a d m i n i s t e re d
board of trustees;

by

Where a demand for constitution of a

provident fund is made, the employer
of
the
establishment
shall
m a ke
necessary rules for its constitution
within a period of six months and the
fund shall start operation before the
expiry of that period.

6. ADMINISTRATION AND MANAGEMENT

OF THE FUND:
There shall be constituted a Board of
Tr u s t e e s .
Fu n d
shall
be
held
and
a d m i n i s t e r e d b y a B o a r d o f Tr u s t e e s .

Equal number of persons nominated by

the collective bargaining agent and/or
t w o p e r s o n s e l e c te d b y th e w o r ke r s o f
the company; and

E q u a l n u m b e r o f Pe r s o n s n o m i n a t e d b y
t h e e m p l o y e r.
All members of the board of trustees
s h a l l h o l d o ffi c e f o r a p e r i o d o f t w o
years. A person nominated by the
government shall be its chairman.

7. ELIGIBILITY OF CONTRIBUTION TO THE FUND :

A l l p e rm a n e n t w o r ke r a ft e r t h e
completion of one years of
service shall be eligible to
contribute in every months to
the fund.

8. CONTRIBUTION TO THE FUND:

Every eligible employee shall

contribute
unless
otherwise
mutually agreed, not less than
seven percent and not more
than
eight
percent
of
his
monthly basic wages and the
employer shall contribute to it
an equal amount.

9. INVESTMENT SCOPE :
At least half of the total
accumulation
in
such
fund
shall
be
invested
for
the
purpose
of
any
of
the
following :
I.C.B.
Mutual
Fu n d
C e r t i fi c a t e s ;
I . C . B . U n i t C e r t i fi c a t e s ;
Government
securities
i n cl u d i n g D ef en s e a n d Po s t a l
S a v i n g C e r t i fi c a t e s ; a n d

10. RECOGNITION MERITS:

Companys
contribution
to
the fund shall be allowable
expenditure.
Employees
will
get
tax
rebate for investment to the
fund.
Income of the fund will be
non
taxable
for
the
employees subject to certain
condition.

11. NON-RECOGNITION DEMERITS:

Companys
contribution
to
the fund shall be disallowed
and added to total income of
t h e c o m p a n y.
Employees will not get tax
rebate
for
making
such
investment.
Income
of
the
fund
taxable for employees.

will

12. AUDIT OF THE ACCOUNTS OF THE

FUND:
T h e Fu n d a c c o u n t s s h a l l b e
audited
annually
by
the
a u d i t o r.
The Government may, at its
own
cost,
appoint
independent auditor for a
s p e c i a l a u d i t o f t h e Fu n d .

13. EXPENSES FOR MAINTENANCE, AUDIT

AND ACCOUNTS OF THE FUND:
The
Cost
of
the
audit
and
accounts of the shall borne by
the company as the accounts of
the company are audited.
The Government will bear the
cost of audit if they
appoint
independent
auditor
for
a
s p e c i a l a u d i t o f t h e Fu n d .
The cost of maintenance of the
fund shall be borne by the

14. WORKS TO BE PERFORMED AFTER

FORMATION OF PF:
Apply
NBR;

for

Re c o g n i t i o n

from

Open Separate Bank account

for the funds;
Made proper investment
prescribed;
Maintain individual
and trial balance;

as

ledgers

14. WORKS TO BE PERFORMED AFTER

FORMATION OF PF:
Preparation
of
Fi n a n c i a l
S t a t e m e n t s o f t h e Fu n d ; a n d
Conduction
Practicing
Accountants.

of

Audit
by
Chartered

A statement of accounts of the

fund, together with the audit
report shall be forwarded to the
Director of Labor within one