Nepal launches contribution-based Social Security Scheme

The Government of Nepal launched its contribution-based Social Security Scheme today. The contribution-based social security scheme is funded through the contributions made by the workers and the employers. This is a historical step towards achieving decent work for all.

Press release | Kathmandu, Nepal | 27 November 2018
Following years of meticulous efforts and preparation, the Government of Nepal launched its contribution-based Social Security Scheme today amidst a special function. The scheme is set to initially include medical, health and maternity benefit; accidental and disability benefit; benefits for dependent family members and old-age benefit. This is a historical step towards achieving decent work for all. The Government plans to extend the scheme to workers in the informal sector soon.


Rt. Hon'ble Prime Minister, K.P. Sharma Oli speaking at the launch programme

Hon'ble Minister, Gokarna Bista, Ministry of Labour, Employment and Social Security
In 2017, Nepal promulgated two major legislations related to labour, namely the Labour Act 2017 and the Contribution-based Social Security Act 2017, and then prepared regulations required for their implementation. The Social Security Act 2017 and its regulations provide legal foundations for application of the new scheme. The Government of Nepal has decided to mark “Social Security Day” every year on this day.

According to the Ministry of Labour, Employment and Social Security, the employers have been asked to submit their employees’ database before 21 May 2019. Both the workers and the employers are expected to make their contribution to the fund mandatorily from 22 May 2019 onwards. To begin with, the scheme will be implemented in Province 3.  It will then be gradually expanded to other Provinces.

The contribution-based social security scheme is funded through the contributions made by the workers and the employers. While the workers contribute 11 per cent of their basic salary, the employers top up 20 per cent of the workers’ basic salary. Most importantly, the workers are eligible to participate in the social security scheme from day one of their employment, and there is no probation period of employment to be eligible to participate in the scheme. However, workers cannot claim for a particular benefit unless they have made mandatory contribution for a number of months into the fund. For example, to claim a medical benefit, a worker must have deposited his/her contribution regularly for at least six months.

The ILO has been continuously providing technical assistance to the Government of Nepal, and its social partners. The newly launched Social Security Scheme is an outcome of the combined efforts of the ILO constituents, and can be considered as one of the milestones of the ILO’s on-going interventions in Nepal. This initiative was welcomed by workers’ organizations, employers’ organization as well as the Prime Minister’s Office and seen as crucial move towards recognition of contribution of labour to the development of the country. Gokarna Bista, the Minister of Labour, Employment and Social Security, called this “a beginning of a new era”.

Stage - Social Security Scheme launching programme
Audience
ILO's Director and officials