Nepal | May 21, 2019

Revolving Social Security Fund from Nov 13

Employers will have to deposit funds every month in SSF

Ram Kumar Kamat

Kathmandu, September 20

The government will soon set up a revolving Social Security Fund that will run social security benefit programmes for the staff of government and private organisations.

Contributory Social Security Act that has a provision for the inception of a revolving SSF will come into force on November 13.

Krishna Gyawali,  a joint secretary at the Ministry of Labour and Employment, told The Himalayan Times that the new act was a win-win formula for both employees and employers.

He said the employers would have to deposit their share of employee’s provident fund, gratuity amount and other benefits that they are supposed to give to their employees.

Employees will also have to deposit 11 per cent of their basic salary to the SSF. Employees have already been depositing 11 per cent (10 per cent to the provident fund and one per cent to the social security fund that was created seven years ago).

Gyawali said Rs 15.5 billion that remained in the Social Security Fund of the Ministry of Finance would be used to create a grand revolving Social Security Fund that would benefit almost 25 lakh government and private sector employees.

“The new scheme is like social insurance. Once employers and employees deposit their share, they won’t have to spend any money when employees fall sick or meet with accident,” Gyawali said.

“The employers will contribute almost the same amount to the Social Security Fund that they are supposed to contribute under labour laws and Contributory Social Security Act,” Gyawali said.

He added that  the government was yet to work out the final contribution from employees and employers.

He said the act envisaged to run seven security plans, including accident security plan, safe motherhood plan, unemployment allowance plan and medical treatment plan for which the current level of contribution made by employees and employers might be insufficient.

“We are working on contribution percentage formula. The stakeholders will have to increase their contribution slightly but that will be determined through consensus among all stakeholders,” he added.

President of General Federation of Nepalese Trade Unions (GEFONT) Bishnu Rimal said the law was enacted with the consent of employers and trade unions and it was a win-win deal for all stakeholders.

The employees, he said, would have to contribute 11 per cent of their basic salary and their employers would deposit around 20 per cent of the basic salary of their employees   including gratuity and other amounts that the employers were supposed to pay to their staff.

Rimal said the new act did not place any extra burden on employers.

“Under the current system the employers pay around 28 per cent of the basic salary of their employees in the form of provident fund contribution, gratuity and other benefits but under this new rule, they will only pay around 20 per cent.

“So the new provisions will also benefit employers in the long run. The only difference is that the employers will have to deposit money every month,” he added.

He said the bill would help the government achieve the goal of socialism as envisioned in the constitution.

Rimal said the provisions of Contributory Social Security Act and new Labour Act would help the government create a system whereby every citizen would get social security benefits from their own earning without putting any burden on the government.

Section 62 of the act states that it will be the government’s duty to continue social security plans if the amount in the SSF is insufficient.

The bill adds that all pension funds will be deposited in the SSF and donations from the government, foreign governments and international non-governmental organisations could also be deposited in the SSF.

The new law stipulates that the government will carry out phase-wise security plan as per the priority fixed by the Social Security Fund.

 


A version of this article appears in print on September 21, 2017 of The Himalayan Times.


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