The government has allowed formal sector employees to purchase contribution-based social security schemes from two additional state-owned enterprises in a shift from its previous decision that had made it mandatory for workers to rely exclusively on services offered by the Social Security Fund.

Earlier, the government had made it mandatory for formal sector workers to exclusively subscribe to social security schemes floated by the SSF. This had created confusion, as many employees had subscribed to social security schemes floated by Employees Provident Fund and Citizen Investment Trust.

Amending its Social Security Scheme Operation Guideline, the Ministry of Labour, Employment and Social Security, which operates the SSF, today said employees have the option of acquiring services from EFP and CIT as well.

“But employees must get enrolled in social security programme at any one of these three agencies, as social security has become mandatory for formal sector workers from today,” said Ram Prasad Ghimire, joint secretary and head of labour relations and social protection section at MoLESS.

Ghimire claimed that the government would implement all the provisions in the SSF Act and the operation guidelines.

EPF and CIT, which are under the Ministry of Finance, have been selling provident fund, along with savings schemes, to formal sector employees for decades.

“But clients of EPF and CIT have the option of terminating their contracts with these two state-owned enterprises and relocating themselves to the SSF. If clients wish to do so, the SSF will facilitate them. Clients of EPF and CIT can also transfer their savings to SSF and subscribe to SSF’s pension scheme,” states the amended guideline.

Raman Nepal, executive director of CIT, said they planned to introduce additional schemes in the near future. “Our schemes are guided by the CIT Act, according to which we don’t need to discontinue our existing schemes.”

The government today also announced that the registration period for the social security scheme had been extended by three months. The new deadline has been set for
October 17.

According to Chandra Prasad Dhakal, vice-president of Federation of Nepalese Chambers of Commerce and Industry, the government had amended its guideline based on the formal understanding reached earlier with private sector players.

Under the scheme, private sector employees will have to contribute 11 per cent of their basic salary to the fund, while employers or firms will have to contribute another 20 per cent of the employees’ basic salary. According to 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.

Till date, nearly 3,600 firms have registered their details at the fund, while a number of firms have been registering themselves via the fund’s website.

Published on: 18 July 2019 | The Himalayan Times