Five Years of SSF: Multiple schemes, low attraction

KATHMANDU: Even though five years have passed since the contribution-based Social Security Fund (SSF) came into operation, the interest of employers and contributors towards its schemes has not increased as expected.

The SSF has been introducing new schemes every year to bring more employers and contributors on board. However, neither employers nor contributors seem to be interested in those schemes. Experts say that since contributors are not very attracted to its schemes, questions about the justification of the SSF are being raised. SSF officials, however, insist that the attraction will increase gradually.

The government announced the contribution-based SSF on November 27, 2018. The SSF introduced a special plan to enroll workers from the unorganized sector, foreign employment workers, and agricultural sector workers in April last year. Among them, only the attraction of foreign employment workers has increased in its scheme. According to the SSF, 466,622 foreign employment workers have joined the SSF so far. Unorganized sector workers are not linked to the fund.

According to the National Economic Census 2018, 923,300 institutions employ 4.3 million workers across the country. However, only 999,000 workers and 18,437 employers have enrolled with the SSF in the five-year period. This is only 11% of the workers and 7% of employers.

Rohit Regmi, the joint spokesperson for the SSF, informed that the government has been introducing different types of new schemes through SSF for Nepali citizens. He said that the SSF is trying to connect employers and contributors to different schemes. “Contribution-based social security schemes have been implemented for the past five years. The achievements are not as per the expectations as it took time to make employers and contributors aware of the benefits of joining SSF,” he added.

Regmi said that the fund has sent a letter to all the local units and asked them to enroll workers in the informal sector in the SSF. So far, six local units have joined the SSF, while two more local units are in the process of joining.

According to SSF, it has collected Rs 44.85 billion from contributors so far. Likewise, 333,000 contributors have received claim payments worth Rs 6.44 billion under different schemes of the SSF.

The SSF has introduced about a dozen schemes over the past five years. Although few of them brought for contributors were implemented, many have not been implemented.

The SSF initially launched four schemes – Medicine, Health, and Maternity Protection Plan; Accident and Disability Safety Plan; Dependent Family Protection Plan; and Old Age Protection Plan.

In the fiscal year 2020/2021, SSF introduced plans offering contributors housing loans of up to Rs 10 million, education loans of up to Rs 3.5 million, and Rs 2.5 million social loans. However, neither employers nor contributors showed much response to these plans. According to the SSF, 9,744 contributors have taken Rs 1.72 billion under special loans, and 17 have taken housing loans worth Rs 28.9 million.

Although the SSF revised its work procedure to distribute 28.33% out of 31% contributions as pension and gratuity – 20% for pension and 8.33% for gratuity – it hasn’t come into implementation yet. As per the new provision, contributors can receive a pension from 20% of the contribution they made and a gratuity from 8.33% of the contribution even if they are not working.

Employers participating in SSF will have to deduct 11% of the basic salary of workers, add 20% of the basic salary from their side, and deposit the amount to SSF.