What is Social Security Fund (SSF)?

Social Secutiry Fund (SSF) is a fund established under and regulated by Social Security Act, 2075. The Government of Nepal has framed the Social Security Regulations, 2075 by exercising the power conferred to it under Section 69 of the Social Security Act. The Social Security Regulations has been published in Nepal Gazette on November 19, 2018 (Mangsir 03, 2075) with immediate effect.

Who are eligible to enroll in Social Security Fund?

The Enrollment Gazette Notice does not specify the sector or nature of industry, business, service or transaction subject to the enrollment with Fund. Therefore, all employers are required to be registered with the Fund.

Self-employed employees and employees working in informal sectors are also eligible to make voluntary contribution.

What are the timelines specified to be listed under Social Security Fund?

The government specifies the timeline within which the employer is required to be listed in the Fund. Timeline as specified in Enrollment Gazette Notice is within 3 months from the date as mentioned below:

Employers by Region (Location)	Within 3 months from	Deadline Date
Employers and Outsourcing Companies within Kathmandu Valley	Mangsir 06, 2075	Within Falgun 05, 2075
Employers of Province Number 3 (except Kathmandu Valley)	Mangsir 15, 2075	Within Falgun 14, 2075
Employers of Province Number 1	Poush 01, 2075	Within Falgun 30, 2075
Employers of Province Number 2	Poush 15, 2075	Within Chaitra 14, 2075
Employers of Gandaki Province and Province Number 5	Magh 01, 2075	Within Chaitra 30, 2075

Upon enrollment of employers within the aforementioned timeline, they are required to enroll their employees with the SSF within 3 months after registration of the employers.

What happens to the previous contributions made to EFP, CIT, and Gratuity Funds?

EPF/ CIT	All the deposits in EPF and CIT before the establishment of Fund shall be transferred to Fund within 6 months of the listing of the employer.
GRATUITY	All the deposits for Gratuity before the establishment of Fund shall be transferred to Fund within 2 years of the listing of the employer. If the employee is entitled to gratuity exceeding 8.33%, the amount in excess of that limit shall be arranged for payment to such employee.

What is the ratio of contributions to be made in Social Security?

Employer and employee are required to contribute the below-mentioned portion of the basic salary of employee to the Fund.

Employer: 20% of Basic Salary

Employee: 11% of Basic Salary

Total: 31% of Basic Salary

This is in addition to the 1% Social Security Tax deducted from the employee’s remuneration.

The contribution should be deposited to the Fund within 15 days from the date of end of the month in which the income subject to contribution is payable.

How are amounts contributed to Social Security Funds are allocated towards different schemes?

Contribution to the Fund will be used for the schemes as mentioned below in the given percentages:

Medical Treatment, Health and Maternity Protection Scheme	1%
Accident and Disability Protection Scheme	1.40%
Dependent Family Protection Scheme	0.27%
Old Age Protection Scheme	28.33%

What is Medical Treatment, Health, and Maternity Protection Scheme?

This scheme comprises of two facilities: (a) Medical and Health Protection Facilities and (b) Maternity Protection Facilities for the Contributor or Contributors Wife.

The Contributor who have contributed to the fund for the of 6 months are entitled for Medical and Health Protection Facilities.

However, Contributors should contribute for 12 months within a period of 18 months in order to obtain the Maternity Protection Facility.  

Coverage under the Scheme:

• Medical Consultancy Fees
• Admission and Operation charges of the hospital
• Diagnosis and treatment cost
• Medicine Expenses
• Expenses incurred for regular diagnosis and checkup related to maternity, hospital fees and child care expenses for 3 months from the delivery.
• Medical Consultancy Fees for the home treatment in case the contributor is unable to reach hospital.

Limit of Benefits

• Treatment by admission to hospital: Amount not exceeding Rs.1 Lakh p.a.
• Treatment without admitting to hospital as per the prescription of doctor: Amount not exceeding Rs. 25000 p.a.
• Cost incurred for the regular pregnancy test of the Contributor or Contributors Wife, hospital admission, operation and treatment of child for 3 months: Amount not exceeding Rs.1 Lakh p.a.
• Contributors has to bear 20% of the total benefit claimed and gross benefit shall not exceed Rs.1 Lakh p.a.
• Contributor or wife of contributor having child delivered or having abortion after 24 weeks or miscarriage: Benefit equivalent to one month’s minimum basic remuneration per child.
• (In case both husband and wife are contributors, only one individual is entitled to claim the benefit)

Benefit in Lieu of Leave period

• Contributor is admitted to the hospital or is under treatment at home and the leave days exceeds the 12 days of sick leave as prescribed by Labour Act: Entitled to sick payment equal to 60% of basic remuneration (Maximum period for such payment is 13 weeks including the paid sick leave)
• Contributor exceeds 60 days of maternity leave days as prescribed by Labour Act: Entitled to sick payment equal to 60% of basic remuneration (Maximum period of 98 days including 60 days of paid maternity leave)

Such benefit related to leave payment is beyond the limit of facilities under MEDICAL TREATMENT, HEALTH AND MATERNITY PROTECTION SCHEME.

What is the Accident and Disability Protection Scheme?

In case of employment related accidents, benefit is available from the date of contribution to the fund. However, in case of treatment of occupational disease, benefit is available only after 2 years of the contribution to the fund.

For Accidents and occupational diseases:

• Total expenses incurred for the treatment of employment related accident or occupational diseases.
• Treatment expenses up to NPR 7,00,000 in case of accident except the employment related accident.

Temporary Disability:

60% of basic remuneration on monthly basis until the contributor is able to return to work.

Permanent Disability:

• Lifetime monthly payment based on the ratio of disability as determined by health committee established under Social Security Fund.
• Monthly payment for 100% permanent disable contributor shall not be less than 60% of minimum basic salary and should not exceed 3 times the minimum basic salary.

What is a Dependent Family Protection Scheme?

Pension Benefit

• Provided to husband or wife of the Contributor in the event of death of Contributor due to accident or occupational diseases.
• Lifetime monthly pension amount equivalent to 60% of the basic salary at the time of death.

Educational Benefit to children

• Provided to the children below the age of 18 years in the event of death of the contributor.
• Monthly scholarship amount equivalent to 40% of the last drawn basic remuneration of the Contributor.
• If more than 1 eligible child, 60% of the basic remuneration to be paid proportionately to all children.

Benefit to deceased parents

• Provided to the dependent joint parents of deceased contributor, who was the only child with no spouse and children.
• Lifetime monthly payment amount equivalent to 60% of the basic salary at the time of death.

Funeral Expenses

Rs. 25000 as benefit provided to dependent family of beneficiary of the contributor in case of death of contributor.

What is Old Age Protection Scheme?

This Scheme will be operated by the total amount of 28.33% of the employee’s basic salary deposited in the SSF: 10% PF and 8.33% of gratuity contributed by the employer and 10% PF contribution of the employee.

The amount of gratuity prior to Bhadra 19, 2074 should be paid out to the employee and the amount of gratuity only after the cut-off date should be transferred to the SSF.

The contributors shall receive (a) Pension Benefits, or (b) Retirement Scheme Benefits.

Pension Benefit

• Eligibility:
  • Employees employed from 1^st Shrawan, 2076
  • Employees working with the employer prior to Shrawan 01, 2076 and if they accept the Scheme under the Collective Bargaining Agreement.
• The contributor shall be above the permanent retirement age of 60 and should have contributed to fund for at least 15 years
• Computation of monthly pension amount: (Total contribution of employee & employer + Investment proceeds)/180 months
• In case of death of the Contributor prior to the retirement age, their heir shall receive the total lump sum amount of the contribution made by the employer and the employee and accrued benefit received from the Fund.

Retirement Scheme Benefit

The Contributors working prior to 1^st Shrawan, 2076 contributing 28.33% for provident fund and gratuity shall be entitled to receive a lump sum amount of the contribution and income accrued on such amount upon retirement unless they have agreed to participate in pension scheme under Collective Bargaining Agreement with the employer.

**DISCLAIMER: This document is prepared for general understanding and should not be taken for any legal purpose without consulting experts. **