Ever since its launch in November 2018 by the then Prime Minister KP Sharma Oli amid much fanfare, the Social Security Fund (SSF) has been in the news. The erstwhile government portrayed SSF as the start of the new era in terms of labor welfare in Nepal.
But four years down the line, the much-talked-about scheme has few takers as many of its supposed beneficiaries are not convinced about it, especially the private sector employees.
The employee unions of 22 commercial banks in July last year even filed a writ petition in the Supreme Court asking for a repeal of mandatory listing of their organizations and employees in SSF citing that it was less beneficial to workers than existing retirement and welfare funds including Employees’ Provident Fund and Citizen Investment Trust (CIT).
While the Supreme Court has already issued an interim order against SSF directing the fund to halt the implementation of the mandatory rule for the employees of the private companies to be listed in SSF.
Now, efforts are being made to SSF workable to the beneficiaries as well as reduce tug of war between SSF and EPF.
The government, through the Labour Act, has made it mandatory for private sector companies to get listed in SSF. the Labour Act envisioned these facilities with a view that they (private sector employees) should not be deprived of these facilities and the SSF is the part of that implementation.
SSF officials claim that once the arrangements related to the fund are fully implemented, it will ensure harmony in workplaces as it takes care of the workers’ social security requirements.
But both private sector institutions and their employees still have questions and confusions over the SSF.
With SSF coming into existence, EPF would only manage contributions of government and public sector employees. However, as the private sector organizations were already enrolled in EPF, confusion prevails on what will happen to the amount that has already been deposited in EPF.
A board meeting of the EPF has recently decided that the amount would be transferred to the SSF if the employer decided not to continue contributing to the EPF. According to Jeevan Kumar Katuwal, joint administrator of the EPF, the EPF board is discussing the models to transfer the money to the SSF.
“As the amount is huge, it is not possible to transfer in a short span of time. The board is discussing different models,” said Katuwal in an interaction program titled ‘Inter-coordination between EPF and SSF: Challenges and Solutions’ organized by Human Resource Society Nepal in the first week of December.
EPF has presented three options: Beneficiaries can hold the amount in EPF and enjoy interest, beneficiaries can transfer the amount, or beneficiaries can also withdraw the amount.
But beneficiaries would not get the amount solely with their decision. Either the employer has to decide to transfer the amount of all the employees, or the employee should submit proof that he/she is no longer associated with the organization.
Concerns Over Benefits
The SSF rules require private sector employees to reach 60 years of age and 15 years of contributions to the fund to be eligible for pension. There were many questions such as: What if the employee contributes for five years and leaves Nepal? Will he/she get the contributed amount or not?
“In such conditions, the beneficiary would get the money they have contributed to the fund,” said Rohit Regmi, Deputy Director of the SSF. “If someone has contributed for less than 15 years and is leaving the country or is not willing to work, the amount can be withdrawn,” he added.
As per the law, an employee has to contribute for 15 years or more to be eligible for SSF pension benefits. And the beneficiary should also reach the age of 60 to receive monthly benefits.
The amount contributed to SSF for the whole career of the employee would be divided by 180. This amount would be given as a monthly pension to the employee.
Suppose, if an employee contributes Rs 30 million in his/her career, then the monthly pension would be Rs 16,666. This has created another debate. “The amount would be little, given the rate of inflation in the market. The amount should be divided by 120 to set the monthly pension instead of the current 180 months,” questioned Shyam Rupakheti of Nepal Orthopedics Hospital.
Private sector employees also have some other concerns. After the employer decides to join SSF, employees have to wait for 36 months to be eligible for getting loans from the fund. Likewise, one has to wait for three months to get a medical claim.
“The 36-month period to get a loan from SSF is not logical. It should be changed, and the government is discussing it,” said Regmi. As for the conditions set for the medical claims, Regami said three-month period for medical claims has been set as per the international standard.
“The medical claim the SSF provides is minimal compared to what is spent for the medical treatment. How this issue can be resolved?” asked Anibha Shakya of Quest Pharmaceuticals.
According to the SSF, at least 110 hospitals across the country have signed a memorandum of understanding to provide health services at the government rate. “The beneficiaries should only present the card provided by the SSF. They don’t need to pay at the hospital. The hospital will claim the amount with the SSF,” said Regmi.