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By Dipesh Ghimire

Insights on the Social Security Fund (SSF)

Insights on the Social Security Fund (SSF)

The Social Security Fund (SSF) in Nepal formally began receiving worker contributions on August 1, 2019 (2076 Shrawan 1 B.S.). Initially, the implementation faced challenges, but the introduction of various guidelines—2018 Operational Guideline for Formal Sector Workers, 2022 Guideline for Informal and Self-Employed Workers, and 2022 Guideline for Foreign Employment Workers—significantly expanded its scope. By the end of 2023, the SSF had registered 18,554 employers and 1,022,896 contributors, reflecting growing trust in the system.

Constitutional and Legal Foundation

Nepal's Constitution (Article 34, Clause 2) guarantees every worker the right to fair wages and contribution-based social security. The Labor Act, 2017, particularly Sections 52–56, forms the legal framework for establishing the SSF and ensuring workers’ rights to social security benefits.

Alignment with International Standards

The International Labour Organization’s (ILO) Social Security Convention No. 102 sets minimum standards across nine key areas, such as unemployment, healthcare, maternity, disability, and old-age benefits. Except for unemployment, Nepal’s SSF covers all these areas, making it a comprehensive safety net for workers.

Key Benefits and Responsibilities

  1. No Reduction in Existing Benefits: Workers' existing benefits remain unaffected by SSF enrollment, as ensured by Sections 52-54 of the Labor Act, 2017.

  2. Fund Continuity: Even in the event of fund dissolution, the Government of Nepal assumes responsibility for providing all promised benefits, as outlined in the Social Security Act, 2017.

  3. Impact on Collective Bargaining: The Labor Act permits collective bargaining but excludes SSF-related contribution rates and benefits from negotiation.

  4. Mandatory Contributions: Employers contribute 20% of basic salary, while workers contribute 11%, totaling 31% towards the fund.

Difference from Retirement Funds

Unlike retirement funds, which provide lump-sum payouts upon job termination, the SSF ensures long-term security. It addresses risks like illness, disability, and family care throughout a worker’s life, making it incomparable to traditional retirement funds.

Participation of the Financial Sector

Despite initial reluctance, legal rulings have paved the way for greater participation of banking and financial sector employees in the SSF.

Benefits for Stakeholders

  1. For the Government: Transitioning non-contributory benefits into the SSF reduces fiscal burdens, redirecting resources toward productive sectors and minimizing dependency on unsustainable welfare programs.

  2. For Employers: SSF participation helps mitigate legal liabilities, fosters industrial harmony, and enhances productivity.

  3. For Workers: SSF provides comprehensive protection against life’s uncertainties, making it a reliable partner for workers' welfare.

The Social Security Fund, though a new initiative, is a critical step toward fulfilling workers' constitutional rights. A collaborative effort involving the government, employers, and trade unions is essential to dispel misconceptions, ensure effective implementation, and achieve long-term sustainability. Making SSF enrollment mandatory during registration renewals, tax clearance processes, and financial transactions can expand its coverage significantly. This shift can help redirect national resources from non-contributory welfare to productive investments, fostering the vision of a Prosperous Nepal, Happy Nepali.

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