Overview of Contribution based Social Security Rules, 2075 (2018)
The Contribution Based Social Security Rules, 2075 (“Rules”) were made using the authority granted by Section 69 of the Contribution Based Social Security Act, 2074 to supplement the Act. The Rules were published in the Nepal Gazette on 3rd Mangsir, 2075 (19th November, 2018) with immediate effect.
The major provisions of these Rules are as follows;
- DEFINITION OF GOVERNMENT FUND
1.1 The Rules define government fund means any of the following;
a. Any fund reserved by Government of Nepal (“GoN”), Province Government and Local Government or any other government fund.
b. Fund of local organization, corporation, board, authority, academy or of any such institutions with full or partial ownership of GoN, Provincial Government or Local Government.
c. Any fund run by the grant from the GoN, Provincial Government or Local Government.
d. Any fund established to give retirement payment to the holder of public position.
2. PARTICIPATION IN THE SOCIAL SECURITY SCHEME
2.1 The following people can participate in the Social Security Scheme;
2.2 Person receiving remuneration from the government fund can participate in the social security scheme as published by the GoN in Nepal Gazette
2.3 Entrepreneurs and Workers in informal sectors can participate in the social security schemes recommended by the Executive Committee “Committee” from the date fixed by the Ministry. To encourage such workers, GoN or Provincial Government or Local Government shall match the amount set for related schemes from their own budget in the name of the fund.
2.4 The Social Security Fund “Fund” can enter into an agreement with the bank and financial institutions in order to collect the contributed amount. The Fund should also make available the details of the contributed amount to the contributors and their employers if they want.
3. CONTRIBUTION DURING UNPAID PERIOD
3.1 When a worker is unable to contribute to the social security fund due to not getting paid, the employer should contribute to the social security fund, the amount to be submitted by such worker for maximum of three months. The employer can later deduct such amount from the salary, allowance or other benefits provided to the worker. While doing so, the employer can only deduct maximum 33% of salary, allowance or other facilities per month.
4. ACCOUNT OF SOCIAL SECURITY FUND
4.1 The account of the social security fund shall be run by the joint signature of the executive director or official appointed by the executive director and the chief auditor.
5. SOCIAL SECURITY SCHEME PROPOSAL
5.1 Executive Director shall present the necessary proposal to run the social security scheme in front of the working committee. Such proposal should include the following;
a. Sector in which the scheme is to be implemented,
b. Targeted group,
c. The time period of the social security scheme, the basis for the inclusion in the scheme, details and the procedure of collection of contribution,
d. The benefits to be gained from the social security scheme and the terms and conditions to be fulfilled to gain such benefits,
e. The time to receive benefits and payment procedure,
f. Other necessary details.
5.2 The operation of such social security scheme shall be from the date as determined by the fund unless the starting date is already mentioned in the social security scheme itself.
5.3 The Fund has to publish any social security scheme operated by it in its website or through other communication medium.
6. SUSPENSION OF THE BENEFITS
6.1 On the recommendation of the committee, the fund can suspend the benefits received by the contributors;
a. If the identity of the contributor cannot be determined. In this case, the benefits are suspended until the identity is determined.
b. Order of court or any other judicial body.
c. If the GoN informs about the extreme economic crisis or any extraordinary situation in the country.
6.2 The suspension is lifted when the government informs about the non-existence of such situation.
7. RECOVERY OF UNDUE BENEFITS
7.1 If any person not entitled to benefits from the Social Security Fund Act and Rules receives benefits, the fund shall write to the concerned employer to recover the amount of such benefits. If the employer fails to recover such amount, the fund can recover such amount by freezing the movable and immovable property of such person and then deposit it into the fund.
7.2 If any contributors receive more benefit than he/she is entitled to from the fund, the fund can recover the amount of such benefit from the remaining amount that he/she is yet to receive from the fund. If that is not enough, such amount can be recovered from any income from the employment or benefits to be received during the retirement from the service. If even this is not enough to recover such amount, the fund can freeze the movable and immovable property in the name of such person and deposit the recovered amount in the fund.
- To enlist in the social security fund, the employer should write application in prescribed format (Schedule 1) to the institution or office determined by the social security fund or through online unified computer system within the prescribed time published in the notice with the following details;
a. Certificate of registration of the Employer’s firm, organization or company,
b. Employer’s PAN or VAT certificate,
c. Resolution to enlist,
d. Details of the contributing employees.
8.2 The workers in informal sectors and self-employed persons can write an application in the prescribed format in Schedule 2.
8.4 Upon the approval of the application, the fund should enlist the employer and provide enlistment number as well as certificate of enlistment.
8.5 If the employee involved in any social security scheme gets retired, dies or no longer remains in employment for any other reason, the employer should inform about the same to the fund within one month. If the informal worker or self-employed contributor to the fund dies, the dependent family or guardian should inform about the same to the fund within a month.
9. DELISTING OF THE EMPLOYER The Rules provide following conditions for delisting of the employer;
a. If the employer gets dissolved, goes into liquidation or becomes insolvent,
b. If the employer informs the fund about the closure of the business in accordance with the existing laws,
c. Cancellation of Employer’s Registration,
e. Cancellation of the registration of the company or,
f. The business of the employer is closed as per the order of the court.
9.2 If the employer is delisted and does not bear social security number, such employer has a duty to pay the remaining amount of the contributors to the fund from his/her movable and immovable property and if that is not enough, the amount should be paid on the proportionate basis of the contributors’ contribution.
10. THE MEETING OF THE COMITTEE
10.1 The committee can call a meeting through teleconference or any other electronic medium, however the video recording of such meeting should be digitally certified and written recordings should be archived
11. SPECIAL PROVISION ON MEETING
- 1/3rd of the total members of the committee can give in writing about the topics to be discussed in the meeting to the Chair Person. The Chair Person then has to call for the meeting within 7 work days of receiving such request.
12. INTERNAL CONTROL SYSTEM
12.1 The fund has to implement internal control System within six months of the implementation of the Social Security Rules 2075. While preparing the internal control system, the Fund has to include topics like working procedure, identification of the risky sectors and mitigation, information dissemination and monitoring evaluation of every work done by the Fund. For this the executive director should appoint any senior official or any other official with no conflict of interest.
12.2 It is the duty of the executive director to make the internal control system effective by improving the mistakes.
12.3 The monitoring of the internal control system should be done at least twice every year.
13 INSURANCE VALUATION
13.1 The Social Security Act 2074 requires the committee to make insurance valuation of the economic status, assets, liabilities and financial status of the Fund through an insurance evaluator every three years.
13.2. Such insurance valuation report should consist the following details;
13.3. The probable challenged to be faced by the fund and the steps to be taken to address them,
13.4. Management of the assets and liabilities of the Fund,
13.5. Review of the rate of contribution
14. SOCIAL SECURITY NUMBER AND IDENTITY CARD
14.1 The Fund shall give social security identity card with social security number.
14.2 The Fund shall bind contributor receiving any benefits in the information technology-based system within three months of the commencement of the Social Security rules.
15. EXECUTIVE DIRECTOR
15.1. As per rule 26, the terms and conditions of the remuneration, facilities and services of the executive director shall be as mentioned in the by-laws of the Fund.
15.2. If any person receiving retirement payment from the government fund is appointed as the executive director, such person can only choose to receive either the retirement payment or the remuneration of the executive officer.
16. CONSULTANTS AND ADVISORS
16.1 The fund can also appoint at the most 3 consultants and advisors for maximum six months in a fiscal year who have to submit their working report per month to the executive director. One copy of such report should be submitted to the Ministry of Labour and Employment by the executive director.
16.2 The consultants and advisors have to submit any information, statistics and report obtained during the course of their work.
17. ANNUAL REPORT
17.1. Section 55 of the Act requires the Fund to submit annual report including expenses, details of the beneficiary group, etc. within 3 months of the end of the fiscal year to the Ministry of the Labour and Employment.
17.2. Rule 30 mentions the following details should be included the report;
a. Details of the employers enlisted in the fund,
b. Details on the social security schemes operated by the fund, number of contributors participating in each scheme and the amount paid to the fund.
c. Details of income and expenditure of every account in the fund,
d. Expenses incurred in the social security and the beneficiary group,
e. Initial deposit in the fund of the fiscal year including the status of the physical resources bought or received in the current fiscal year,
f. Future plans of the Fund, problems and challenges faced by the fund, steps taken for improvement and plans to inculcate,
g. Income and expenditure of the reserved fund account and account of other funds.
17.3. If a contributor working in one type of employer goes to work for a different type of employer, the amount of the social security scheme deposited in the fund in his/her name should be transferred at his/her account concerned with current employer. To do so, the concerned contributor should write to the concerned employer.
17.4. Those who contributed to the fund before the commencement of Social Security Rules 2074 but have not been included in any social security schemes as per these rules, they shall be included in any social security scheme determined by the Government of Nepal upon the recommendation of the executive committee.
18. REPEAL AND PROTECTION
- The Contribution Based Social Security Rules, 2075 repeal the Social Security Fund (Management and Operation) Rules, 2067. Any work done in accordance to the Social Security Fund (Management and Operation) Rules, 2067 shall be deemed to have been done by the Contribution Based Social Security Rules, 2075.