Government mulls contributory pension scheme

Kathmandu, September 13

The government is mulling over introducing contributory pension scheme for farmers from this fiscal.

The Ministry of Agricultural Development (MoAD) is preparing a guideline to implement the ‘pension for farmers’ programme, which was announced by Prime Minister Pushpa Kamal Dahal recently in his address to the Parliament.

The fiscal budget 2016-17 has allocated funds for necessary preparations or to do the groundwork to launch the pension programme. After the prime minister’s address in the Parliament, the MoAD is gearing up to launch the programme in a few districts in the pilot phase from this fiscal.

The MoAD will soon launch the contributory pension scheme, according to MoAD Spokesperson Yogendra Kumar Karkee.

The MoAD had commissioned a study for implementation of the pension scheme for farmers. As per the study report, the government can effectively implement the contributory pension scheme.

As the name suggests, farmers need to also make a certain contribution in the pension programme. Under the scheme, the government would develop a ‘Pension Fund’ in which farmers would deposit money valued at one per cent of their total annual production. Farmers would be asked to deposit one per cent of the total production by calculating it in monetary value. They would be able to deposit the amount in 12 instalments or every month as premium.

The study report has suggested the government to contribute 150 per cent of the premium amount for the farm labours and deprived farmers, 100 per cent for smallholder farmers, 50 per cent for middle-income farmers, and 25 per cent for commercial farmers.

Likewise, the report has suggested contribution from the fund operator like banks and financial institutions at an interest rate of no less than six per cent by the end of the year.

Thus, the government can expand the size of the pension fund and return the amount as pension to the farmers.

The study commissioned by MoAD has also set the criteria for classification of the farmers. Landless people having five livestock (like cows and buffaloes) and 100 fowls have been classified as farm labours, farmers having less than 0.1 hectare of land have been classified as deprived, farmers who own 0.1 to 0.5 hectares of land as smallholder farmers, those with 0.5 to three hectares of land are classified as middle-income farmers and those with three to five hectares of land as commercial farmers.

The study report has also suggested the formation of district-level farmers classification recommendation committee chaired by head of the District Agriculture Development Officer and comprising representatives from the District Administration Office, District Development Committee, District Livestock Services Office, president of the District Chambers of Commerce and Industry, chief of the Irrigation Division Office, chief of District Land Registration Office, chief of District Cooperative Association, farmers’ cooperative association, farmers’ network, farmers that have received President Farmers’ Award on the recommendation of District Agriculture Development Office and planning officer from the District Agriculture Development Office.

Farmers would need to submit attested copy of their citizenship certificate and copy of land registration certificate or a copy of documents that verify the concerned applicant is landless to be eligible to participate in the pension fund scheme, as per the report.

Farmers involved in agriculture for 20 years can withdraw the entire pension amount at once under the recommendation of the Classification Recommendation Committee.

The report has also recommended gratuity for farmers. Farmers involved in agriculture profession for five years would be able to get equivalent to the amount that would be collected in their pension fund over 10 months (their own deposit, government’s contribution and interest); those engaged in agriculture for 10 years would be able to obtain the amount collected in 30 months; and those who have worked in the field for 15 years would get an amount collected in 50 months.

Fund highlights

  • Farmers to deposit 1pc of total production in 12 instalments every year as premium
  • Govt to contribute 150pc of premium for farm labours and deprived farmers; 100pc for smallholder farmers; 50pc for middle-income farmers; 25pc for commercial farmers
  • Annual returns set at minimum of 6pc
  • Farmers involved in agriculture for 20 years can withdraw the entire pension amount at once under therecommendation of the Classification Recommendation Committee
  • Farmers also to receive gratuity, depending on their involvement in the sector