User:Diliprpaudel
== Employee’s Provident Fund & Social Security System in Nepal ==
By- Dilip Raj Paudel
There is no social justice, if there is no social security. In any place there is no peace, if there is no social justice. So it has proved the slogan, "No lasting peace without social justice, No social justice without social security". The concept of social security in Nepal is gradually shifting from the realm of the society to the state. Traditionally and even to date, to a large extent, the society including the extended joint family system and the community has performed the role of social security in Nepal. Women, children, old aged and disabled people all are taken care by the kin and kith's belonging to the Joint family system. People still look upon it as the basic source of social security. The modern form of ``state sponsored social security system is relatively new, unknown and not much. It is still confined to civil service, although the concern for security first appeared in planning the documents in 1985 with the enunciation of the program to fulfill basic needs, namely, food, clothing, shelter, education, health, and security. Unlike other five categories of needs, the security need was found to be a tricky issue during the then repressive authoritarian regime. Therefore, the planners diverted the definition towards "the preservation of productive assets of the country and maintaining peace and tranquility". In a sense, the definition is very much close to classical definition of territorial security as compared to human security.
However, the late two prominent factors have played for the resurgence of social security concern in Nepal. First, is the external: As the paradigm of development shifted from the investment in physical capital to human capital, the concern for social investments, human development, social development and integration, poverty alleviation began to make inroads into Nepal's development thinking as well. It is interesting to note also how the concern for social security in developing countries are growing when the developed nations, all over Europe and America, are grappling with the crisis of social security. The worldwide recession, demographic changes and the changes in the social structure have imposed tremendous pressure on their social security systems that are once portrayed as the pride of industrialized nations.
Second factor is internal. As the level of poverty accentuated, the traditional source of social security is gradually coming apart in Nepal. There is a need for safety nets to protect the destitute and vulnerable. With the migration of young and able person, from the villages to the urban centers and abroad, in search of better employment opportunities, Nepali villages are, gradually, left over to be tended by women, children, old aged and disabled persons. This is evidenced by the fact that nearly 14 % of Nepali household is being headed by females and, in some cases, like Western Hills and Mountains, the figure is as high as 22 %. This is very typical for a paternalistic society. Another indicator of social change in Nepal can be refford from the higher (smaller) growth in smaller (larger) household size due to fragmentation and migration although the average household size is still 5.6. Women, children, old aged, disabled and the increasing levels of poverty in Nepal hardest hit lower caste people. This is the scenario of the rural, agriculture, informal sector; the situation in the formal organized sector is also not better. Unemployment and underemployment are on rise. This is not just because of population pressure, there is an undeclared " employment freeze" in the organized sectors. Even the government employees once thought to have the secured job of all is not remained so any longer felt so. With the gradual opening up of the economy and subsequent competitive pressures, their R's of management, namely, retrenchment, retirement and restructuring are on rise. The external and internal forces have contrived the state to take the responsibility of providing some social protection to its citizens. The introduction of old age and widowhood allowance in 1995 can be taken as an example of the realization.
The genesis of social security system in Nepal can be traced back to the provisions made in the muluki ain (civil code) 1854 under jhara khetala mahal where it was mentioned that the workers should be paid agreed wages and noncompliance of this is legally punishable. It is further stated that no employer can force any person to work against his consent. Actually, the provision is made to guarantee the rights of the workers. This may be a small beginning but in the age of slavery, this is definitely a bold step forward. The legal base provided by the muluki ain is being subsequently captured by numerous other laws and bylaws to be formulated afterwards to guide and regulate employee-employer relationships. As for example, the civil service act and the regulations made under it provide social security framework for the civil servants. Labour act and its regulations spell out social security provisions for enterprises employing more than ten persons. Bonus act, Industrial Apprenticeship Training Act, Foreign Employment Act and Industrial Enterprise Act are some other relevant acts containing safeguards for the workers rights and interests. Similar provisions have been made in other rules and regulations pertaining to specific institutions, stste-owned enterprises and industries. The organized effort to provide social security system in the formal sector of employment can be traced from 1934 when sainik drabya Kosh (army provident fund) was established to provide provident fund services to the army in the Rana regime. This scheme was initiated with the intention of removing financial hardships to the army personnel after their retirement. Under this scheme, the army staffs were required to contribute a specific percentage of their salary to their provident fund (PF) account in Sainik Drabya Kosh. A decade after the inception of Sainik Drabya Kosh, the scheme was extended to cover civil servants as well. A separate organization called Nijamati Provident Fund was established in 1944 to manage the PF scheme for the civil servants working in the Kathmandu Valley. However, in 1948 the coverage of the above scheme was extended and entire civil servants working through out the kingdom of Nepal were provided coverage. In 1959, an Employees Provident Fund department was established under the Ministry of Finance and Economic Affairs. This department was entrusted with the management of both Sainik Drabya Kosh and Nijamati Provident Fund. The scope of the PF scheme was also extended to cover the entire government employees including the police. Three years later a separate Karmachari Sanchaya Kosh (Employee's Provident Fund) act was legislated in the parliament in the year 1962. The same year, present Karmachari Sanchaya Kosh (Employees Provident Fund) was established under this act as an autonomous provident fund organization. After the establishment of KSK, the erstwhile Sainik Drabya Kosh, Nijamati Provident Fund and Provident Fund Department were all merged in KSK. Since then Karmachari Sanchaya Kosh has grown extensively and today it stands as a strong social security providing organization in Nepal. Although provident fund is just a minuscule part of social security system, it is at center stage in Nepal. Over the last sixty-five years in operation, EPF has gradually expanded its coverage to include employees working in the Palace Secretariat (1974), teachers and staff working in various educational institutions (1980) and employees in the private sector organizations (1990). At present, EPF covers more than 350 thousand employees . The main objective of Karmachari Sanchaya Kosh (KSK) also known as Employees Provident Fund (EPF) in English is to manage the provident fund of government, public and private sector employees in the kingdom of Nepal and to help them financially on retirement or separation from their job. Related other objectives of KSK are given below. To mobilize the savings received in KSK through the compulsory provident fund contributions on the part of employees and employer. To extend the KSK coverage so that a larger section of the organized sector employees, who have yet not been covered, can be brought under the KSK umbrella with a view to benefit them. To generate maximum return on the investment of KSK for the benefits of the members ( contributors). To undertake activities that can provide social security to the members of KSK. To conduct research activities and to explore welfare schemes which can benefit the KSK members ( contributors) at large.
The employees Provident Fund is the only social security institution in Nepal. It has received associate membership with international social security Association (ISSA) in 1980. Since then it has been taking active participation in it's activities e.g. meetings, seminars and training organized by the ISSA. In collaboration with the EPF, ISSA had organized its 5-th regional training seminar for Asia and Pacific in Katmandu in 1984.
The Employee's Provident Fund has introduced the following social security schemes for it's members ( contributors):
1. Periodic Pension This scheme was introduced in April 1996 has been effective from 1996, th april (1st baishakha 2053) under this scheme, periodic pension at the rate of 5% to 45% of the PF ammount refunded to members on this retirement is paid to them. The following table shows the existing pension policy of KSK:
Period of contribution Annual Pension Period of pension Below 5 years Five percent of PF withdrawn by the members on termination of their job. One year 1x5=5 % Five to 10 years Three years 3x5=15 % Ten to 15 years Five years 5x5=25 % Fifteen to 25 years Seven years 7x5=35 % Above 25 years Nine years 9x5=45 %
- (Duration is counted only from 2053, 1st Baishakha .)
KSK has stablished special reserve funds from its own earning to finance this pension scheme.
2. Accident Indemnity Scheme
This scheme was introduced in feb1995. under this scheme a lump sum amount of rs. 50,000 are paid to the members or their heir in case of their permanent disability or death due to an accident.
3. Funeral Grants scheme This scheme was introduced with RS 1500 in jan, 1990.now under this scheme the EPF provides asum of Rs. 4000 as funeral grant to the heir of a deceased member.
4. part payment(60%) In this scheme 60% amount of total collection is provide by EPF of the person whose 60 installment is deposit to the provident fund. But nowadays it is stopped due to the concept of ` Abakas Kosh ' and taxation regulation of Government.
5. Special loan (90%)
The special loan facility to the members of KSK was reintroduced by KSK in the year 2000. Under this scheme, KSK members who have contributed their PF for five years in KSK are eligible to apply for loan of up to ninety percent of the amount accumulated in their PF account. This facility is provided against the member's deposit in their PF account and is renewable after every two years. The borrower may repay the special loan either in lump sum or on installment basis.
6. Employee's Welfare Scheme (Insurance) This scheme was initiated by HMG of Nepal in the year 1979 and is implemented through the EPF. In starting, the amount of benefit payable to peon or equivalent employees, non-officer and officers was RS. 10000,12000, and 20000 respectively. Present level of benefit payable to different classes of government employees is shown as below Level of employee Amount RS. Peon or equivalent 40,000 Non-officer 50,000 Officer 75,000 7. House Loan scheme : A) House Loan Scheme : In this scheme KSK provide the amount is equal to contributors 7 Years basic salary in 10.5% rate of intrest. This scheme benificary of those contributors who Deposite the PF since 5 Yrs and who wants to make a house in municipality area and those VDC which is situated in boundary of municapility of Kathmandu Valley . B) Low cost housing : As part of its commitment to provide social security to its members, KSK has initiated the low cost housing scheme for its members. Recently, 112 core houses were constructed in 1.5 hector of land belonging to KSK in Pokhara which is a beautiful tourist city of Nepal. Out of these 112 houses, 109 house were sold to its members on easy installment basis.
8. Educational Loan Scheme : In this scheme, contributors and his/her son/daughter are intrested to learn in bachlor`s or higher Degree but they need money or finincial support, KS KOSH has investing in the rate of 9% intrest to them as a educational loan under the certain term & condition of KSK rule and regulation
Nepal, a sovereign and independent himalyan kingdom lies between 26.22` and 30.27` north latitude and 80.4` and 88.12` east longitude. It has covers an area of 147,181 sq. km. Nepal is a landlocked country. Nepal's economy is predominantly agricultural where about 81 percent of the total population depends on agriculture. Only…. % persons are involved in business, employment of government service and non-government service. In the case of social security, those employments whose provident fund collected in EPF, they are benefited from epf social security scheme. But other employee who are working in private sector, those who's provident fund is not collected in epf, are not benefited from social security scheme of epf. Dailywages labour`s has no facilities of social security from epf and from government. In the context of developed countries, the social security facilities are giving all the people.
ILO`s international convention on 1952 (The social security minimum standard convention of 1952) is identified and direction the following for under development countries. 1. Need for medical care 2. Sickness 3. Maternity 4. Employment injury 5. Old-age 6. Survivor ship 7. Invalidity 8. unemployment 9. maintenance of children As well as International Social security association (ISSA) identified the following social security scheme. 1. Pension for aged, disabled and survivors 2. sickness and maternity , insurance 3. work injury , Indemantion 4. unemployment Allowances 5. Family Allowances 6. Rehabilation ISSA definitation on social security is ~ social security is a system to insure individuals against interruptions or loss of income, and contingencies arising from retirement, marriage, birth, sickness, work injury, maternity, unemployment, death etc… Basically, these nine branches of social security have been derived from the diagnosis of poverty in the industrial countries where employment or full employment in the organized sector is the norm. Protections are designed for the stoppage or reeducation in earning when people are out of work due to unforeseen circumstances. In developing countries, it is not just that people are out of work, even those who are at work had to face severe hardship from low wages, long working hours, hard works and constant threat to unemployment. They are there as if to earn poverty. The character of poverty in developing countries is very much different from that of the industrialized and developed countries. Nepal is the landlocked country. Where, there are various kinds of professional, business, workers, and also involved in agriculture. Besides government and organized corporations employees, all other people are not get social security facilities. Either government or EPF. Government had starting a part of social security's facilities i.e. oldage allowance and disabled allowance. But all are not included. Social security's concept is not limited, and it is providing from government and EPF. It is sufficient or not? What is need for people. How, can be provided. Every person, pension is needed to himself and live with bright future. That's why Nepalese social security system is more suitable subject for research studies on different subject matters. But there are very few investigations that have focused on social security system. The study about the social security of Nepal in detail or in short is not found so far. No one has given an interest about this subject small and some description is focused only in EPF publication named ``kosh samachar " in different vol. before the EPF stablishment, social security and it's concept is not take (thought) seriously in Nepal. When established the sainik drabya kosh, has started to forward the social security's path. In reality, we can say the HMG has not followed the Basic points of the ISSA`s issues and also supported to EPF to the path of social security. However, EPF is trying to provide the many different scheme which are the mirror of the social security system in self-source. This facilities are bineficy only EPF members (contributors) . But it can not support the rest of the Nepalies people. So the government policy must be changed to support them. Nepal Government has turn to the direction of social security and its basic needs ( points) which are inevitably by supported every Nepalese people. This is the main theme of the basic needs and issues to-day. References: 1. Employees provident fund Act,2019(1962) 2. 9th plan & 10th plan –National planning commission, Nepal 3. social security programme throughout the world,1993, ISSA 4. Karmachari sanchaya kosh at a glance 5. kosh –samachar , annual report ,2053 6. kosh –samachar , annual report ,2054 7. kosh –samachar , annual report ,2055 8. kosh –samachar , annual report ,2056 9. kosh –samachar , annual report ,2057 10. kosh –samachar , annual report ,2049 11. kosh , vol 38 ,2047 12. kosh , vol 39 ,2047 13. Sainik Drabya kosh, published by karmachari sanchaya kosh. 14. HDR, 1994 15. EPF-WEB site