Social Security Fund in Nepal: What Went Wrong?
It has been six years now since Nepal introduced the Social Security Fund (SSF) to benefit the nation’s workers. Yet, there are significantly fewer individuals registered than anticipated. Even though the government is trying to make the SSF mandatory, not many people have registered.
Enrolment Figures in the Social Security Fund
Latest reports inform that more than 20 lakh workers have applied for the SSF so far. Although not evenly distributed among groups, it is the majority of them, with approximately 15 lakh from foreign employment, where registration is mandatory. This shows that just about 5 lakh people are from domestic enterprises, a small minority of Nepal‘s labor force. The numbers tell us of a massive imbalance, especially if we take into consideration how workers in the country avail themselves of the SSF.
The SSF was originally intended to be a scheme that every employee, foreign and local, would have to join. It was meant to offer considerable social security coverage to everyone. But why are companies and professionals not joining the program in large numbers?
The Role of Misinformation and Implementation Hitches
The main reason for the lackluster participation is a mix of erroneous information and problems with the implementation of the scheme. Numerous misconceptions have spread, which have dissuaded individuals from subscribing to SSF:
1. You will not get the money from Social Security Fund
This myth has made individuals believe that they would lose funds contributed to the SSF. As a matter of fact, it is not true. Employees have rights over their contributions, and there are various mechanisms of accessing funds in case of necessity.
2. You must wait till you’re 60 to make a withdrawal
Another widespread myth is that individuals must wait for the age of 60 to withdraw their money. While there are rules, they are not as strict as most people think. SSF provides other avenues for withdrawing money under extraordinary circumstances, and staff can withdraw their money before the age of 60 under special conditions.
3. It’s simply a retirement plan.
The notion that the SSF is only a pension plan misses a larger perspective. The SSF pays more than retirement funds; it also has other social security benefits such as maternity, disability, and unemployment benefits, among others.
A Hidden Perk: Day One Gratuities
One of the key benefits of SSF that everyone overlooks is gratuity, which is 8.33% of an employee‘s basic salary. In the earlier legislation, gratuity was given only if one was employed with a company for five years. This means that employees who do not take advantage of the Provident Fund scheme can lose out on free money in the form of gratuity, which can be availed from the early periods under the SSF regime. This is extremely crucial for the workers who may switch jobs often since they are able to get their gratuity payments without having to wait for five years of uninterrupted service.