November 28: It has been three years since the government started implementing the contribution-based Social Security Fund (SSF) that was introduced to provide pensions to the workers of the private sector. However, voluntary participation in the Social Security Fund has not yet increased significantly.
In the last four years, 15,831 employers and 295,764 workers have joined the fund. According to the Economic Census 2075, there are 923,000 business establishments operating in Nepal. A total of 462,000 organisations are registered with the government. However, only 15,008 organisations have been listed in the fund so far. From the fact that only 3.5 percent of the formally registered organisations are listed, it is clear that the Social Security Fund has not progressed as expected.
Billions collected, zero operations
So far, billions of rupees have been collected by the SSF from the contributors, but it has not been properly mobilized. The fund has so far collected Rs 10.10 billion from affiliated employers and workers.
However, this amount has not been used for any purpose other than receiving interest from the banks. Showing the lack of policy required to mobilize the money, the government is only receiving interest by keeping the contributors’ money as 'fixed deposits'.
Obligation to rely on debt remains
It has been four years since the Social Security Fund started its scheme but it has not become self-sufficient. Although the office of the Social Security Fund has been established and the staff has been managed, the SSF is still relying on loans to run day-to-day operations.
As per the decision of the Government of Nepal on 2076/9/11, the SSF needs to repay the loan amount within 5 years at the annual interest rate of 3 percent. As per this decision, the fund took the loan of Rs 50 million in 2076/77 for the first time and spent Rs 23 million on administrative operations and management.
Similarly, the SSF operated in loan in FY 2077/78 as well. This year too, the fund has taken a loan of Rs 150 million from the Government of Nepal.
This amount has been spent on office operation, office rent, employees’ salary, services and facilities and the fund is preparing to take an additional loan of Rs 220 million for the current Fiscal Year 2078/79. This loan is being taken in installments.
Lack of ownership among the ministers
During the tenure of the then Minister for Labour, Employment and Social Security Gokarna Bista, there were daily trainings and seminars on social security schemes but after Rameshwor Raya Yadav became labour minister, he did not give any attention to it. After that, Gauri Shankar Chaudhary and now Krishna Kumar Shrestha is the Labor Minister, but none of these ministers seem to be committed to advancing the social security scheme, which is why the fund has become inactive.
Program at the Ministry on the occasion of the annual festival
On the occasion of the 4th annual meeting of the SSF, a low-key program was held at the Ministry of Labour, Employment and Social Security on Saturday. Some private sector representatives and Labor Minister Krishna Kumar Shrestha attended the program.
On the occasion, Minister Shrestha did not hesitate to admit that there were some shortcomings. He also said that the government would expand its branches in all the states and address the issue of banks and financial institutions.
Secretary at the Ministry Surya Prasad Gautam claimed that the social security scheme was successful. Kapil Mani Gyawali, executive director of the fund, expressed his commitment to make the fund contribution-friendly by revising and modifying the work procedures of the fund and claimed that the three-year journey of the fund was successful.
Emphasis on the need to improve weaknesses
At a program held at the Ministry, the representatives of the private sector and trade unions said that the Social Security Fund has not been effective yet and stressed on the need to move forward by rectifying the shortcomings of the past.
Senior Vice President of the Federation of Nepali Chambers of Commerce and Industry Chandra Dhakal, said that the fund should be implemented effectively in Nepal and added that the fund was effective after a long time of its implementation even in the developed nations.
Jagat Singh Simkhada, president of the All Nepal Federation of Trade Unions, said that only a small number of establishments were affiliated to the SSF in Nepal, and questioned the functioning of the fund. Stating that there is a lot of ambiguity in the fund, he said that there is a delay in removing the ambiguity on part of the government.