Oli unveils social security plan for formal sector workers

Nepal Prime Minister KP Sharma Oli on Tuesday unveiled a contribution-based social security scheme for formal sector workers that will cover health and medical facilities, safe motherhood, accident and physical incapacity, security to dependent family members and security at old age.

"It was important to strengthen the system in which the state is accountable to its people. This scheme has been introduced to address that issue," Oli said unveiling the scheme at a function here.

The scheme will compulsorily be applied for formal sector workers and the government will soon launch it for informal sector workers as well, according to the Ministry of Labour, Employment and Social Security.

Oli said people of all ages and categories would be included in the scheme.

As per the scheme, which will come into effect from May 22, private sector employees will have to mandatorily contribute 11 per cent of their basic salary to the social security fund (SSF), while employers will have to contribute another 20 per cent of the employees’ basic salary.

Once these contributions are made, employees will be entitled to compensation if they lose a job or cannot attend work because of pregnancy, illness or accident.

Of the total fund collected, SSF will allocate 3.22 per cent for medical treatment, health and maternity security, and 4.52 per cent for accident and disability security. Likewise, it will allow 0.87 per cent for dependent family security and 91.39 per cent for old age security.

Both employers and employees will have to mandatorily deposit their instalment for the scheme and it is applicable to all types of workers. The scheme is in line with the contribution-based Social Security Regulation.

(With inputs from agencies.)