Nepal | November 27, 2020

Govt to unveil Social Security Scheme today

Umesh Poudel
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  • Employees to contribute 11 pc of their basic pay
  • Employers to chip in 20 pc of staffers’ basic salary

Kathmandu, November 26

The government is all set to unveil the much-hyped social security scheme ensuring security of workers, with Prime Minister KP Sharma Oli scheduled to announce the contribution-based scheme for formal sector workers tomorrow.

The Ministry of Labour, Employment and Social Security has stated that the scheme will be compulsorily applied for formal sector workers and the government will soon launch the scheme for informal sector workers too. As per law, both employers and employees will have to mandatorily deposit their instalment for the scheme and it is applicable for all types of workers. The scheme is in accordance with the Contribution-based Social Security Regulation.

As per MoLESS, the Social Security Fund will start collecting monthly instalments on May 22. SSF started collecting data of formal sector enterprises in Kathmandu valley on November 22 and will expand the exercise across the country soon. “We have already published a notice asking formal sector enterprises to register their entities in our system by February 22. They will then have to submit their employees’ data before May 21,” said Shyamraj Adhikari, executive director of Social Security Fund.

From May 22, private sector employees will have to mandatorily contribute 11 per cent of their basic salary to the fund, while employers will have to contribute another 20 per cent of the employees’ basic salary. Once these contributions are made, employees will be entitled to compensation if they lose a job or cannot attend the workplace because of pregnancy, illness or accident.

At present, employees have to deposit 10 per cent of their basic salary and employers another 10 per cent as provident fund. Employers also have to deposit another 8.33 per cent as gratuity. Once the social security scheme is launched the formal sector will have to mandatorily transfer funds deposited in Citizen Investment Trust and Employees Provident Fund to the SSF.

As per the scheme, of the total fund collected SSF will allocate 3.22 per cent for medical treatment, health and maternity security and 4.52 per cent for accident and disability security. It will allot 0.87 per cent for dependent family security and 91.39 per cent for old age security.

According to Contribution-based Social Security guidelines, to avail medical treatment scheme the contributor must have deposited their instalment regularly in the Social Security Fund for at least six months; to avail health and maternity security, the contributor must have worked for 18 months and regularly deposited instalments for at least 12 months.

The accident and disability security can be availed by workers a day after they deposit their first instalment. Workers can also receive compensation if they are injured in the workplace or develop medical complications due to their work condition after they have worked for a minimum of two years and deposited all instalments on a regular basis.

According to guidelines, workers will be eligible for pension 15 years after they start regular contribution to the fund.

The private sector has said the scheme will help ensure workers’ social security and create investor-friendly environment in the country. “The scheme is being introduced after the government held discussions with the private sector and we welcome this initiative,” said Chandra Dhakal, chairman of Employers’ Council and vice-president of Federation of Nepalese Chambers of Commerce and Industry.


A version of this article appears in print on November 27, 2018 of The Himalayan Times.


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