Life Insurers are positive to shift to Social Security Fund

Kathmandu. Life insurers are willing to shift to Social Security Fund from Provident Fund. During a recently held zoom meeting between the representatives of the Social Security Fund and the member of the Life Insurers’ Association (Jiwan Bima Sangh Nepali, JEBISAN), life insurers expressed their interest to join the fund.

The Social Security Fund shared detail information about the benefits of joining the Fund and the difference between the previous and current arrangements of the Fund.

An official of JEBISAN said, “After the joint meeting, we are positive about joining the fund. We may join the fund soon.”

Currently, most of the banks, financial institutes, and insurance companies are making contributions to the employee’s provident fund. There is strong criticism from the employees of these sectors against the Social Security Fund. Their main concern is that there’s a huge partiality between government employees and private-sector employees; though the private sector employees make more contributions to such funds.

According to the Contribution Based Social Security Act, workers and self-employed people in the formal and informal sectors are supposed to make contributions to the Fund. Similarly, according to the Contribution Based Social Security Regulations 2075, persons receiving remuneration from the Government as well as workers in the informal sector and self-employed individuals are also required to make a contribution to the Fund. If the contribution to the Fund is not made, then the Fund has legal rights to take action against the organized sector.

But banks, insurance, and financial institutions are reluctant to join the Fund with the fear that the existing facilities and benefits will be snatched by the Fund.

Banks, financial institutions, and insurance companies are skeptical since the Social Security Fund recently ordered Sunrise Bank and Global IME to pay Rs 20 million in compensation to the families of the deceased employees.

Some banks have already decided to go to the Social Security Fund after the Fund took coercive action within its legal jurisdiction and life insurance companies are also preparing to go.

The fund has taken such action based on Article 17 of the Act. According to this section, ‘If an employer is not listed in the fund within the period prescribed under this Act or if the worker appointed or employed by the employer is not listed in the fund, the fund may issue the following order to such employer.

  • To immediately get organizational enrollment in the fund or to have the worker individually get enrolled in the fund,
  • The contribution to be made in accordance with this Act from the date of establishment of the employment relationship between the employer and the worker and also deposit the due contribution as per Article 9 in the fund or
  • To order the employer to provide compensation and facilities within the prescribed time as per this Act if the relationship between the employer and the worker has terminated.
  • If the employer does not provide the amount for social security to the worker, the fund will collect the amount and provide it to the concerned worker.

The following are the facilities as per the last amended provision:

  • After the revision of the Social Security Fund Investment Procedure, the facility to be received by the donor has been added. According to the revised procedure, contributors will be able to take loans for special loans, home loans, educational loans, and social work. Contributors will be able to borrow up to 15 percent of the total investment.
  • Contributors will be able to take loans up to Rs. 7.5 million under the home loan. There was a facility to return the invested amount only after 15 years of investment by the donor or after reaching the age of 60 years. After the amendment, the contributor will be given a loan equal to 15 years’ salary.
  • Similarly, a loan of up to Rs 500,000 is available for marriage. Contributors can also get a loan of up to Rs 3.5 million for higher education studies at home and abroad. The fund had amended the working procedure after the scheme failed to attract employers and workers for a long time.
  • In case of permanent disability, the contributor is entitled to a lifetime pension facility on the basis of his / her disability percentage on the basis of 60 percent of his / her remuneration. Currently, the scheme provides pension and retirement benefits.

There is a provision that the workers who came for employment after mid-July 2076 BS to go for the pension scheme. Those who have come for employment before mid-July 2076 BS can choose one of the two facilities.

Contributors must be over 60 years of age to receive this benefit. There is a provision that one must have contributed to the fund for a minimum of 15 years i.e. 180 months after being listed in the fund. Contributors will receive a monthly pension by dividing the amount deposited in the fund by one hundred and eighty.

Under the leave facility, the workers who have come for employment by mid-July 2076 BS are allowed to participate. After reaching the age of 60, they can get the contribution amount and return it as a pension or a lump sum.

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