Social Security Fund threatens six life insurers to join the Fund

Kathmandu: The Social Security Fund (SSF) has issued letters to insurance companies and threatened to take action upon the rejection to join the SSF. The Fund has issued separate letters to Asian Life Insurance, IME Life Insurance, Nepal Life Insurance, National Life Insurance, Prabhu Life Insurance, and Reliable Nepal Life Insurance with a 15 days’ ultimatum.

The letter received by the insurers states that any insurer that has yet to be enrolled in the SSF must get enrolled and if already enrolled must transfer the funds for contribution to the Fund. The letter further reads failure to join and contribute to the Fund may lead to punitive action against the insurers.

These life insurers have been making regular contributions to the Employees’ Provident Fund (EPF) being indifferent to the SSF. At present a total of 20 percent, including 10 percent contribution from the employees, of the basic pay is contributed to the EPF. The SSF has drawn the attention of the insurers to Clause 52 of the Labor Act 2074 which has the provision of contribution to the Social Security Fund by both the employees and employers. In subsection (1), there is a provision that every employer from the organized sector must contribute a total of 31 percent of the basic pay of their employees including 11 percent from the employees and 20 percent from the employer.

The employers and employees of insurance, bank, and financial institutions have been avoiding joining the Fund amid objections over the provisions of the SSF.

The SSF doesn’t refund the contributor in case of retirement prior to the age of 60 years. Further, the dependent of an employee will be left empty hands in case of the death of the bread earner and his spouse.

The huge discrimination between public servants and private sector employees has drawn wide criticism from the employees and employers of the insurance companies which are still avoiding to join the SSF.

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