June 25: Employees of banks and financial institutions (BFIs) have demanded voluntary participation in the government’s Social Security Fund (SSF) instead of mandatory provision. They have expressed objection toward mandatory participation after the central bank directed BFIs to join the SSF mandatorily.

Various associations of BFI employees have accused the government of compelling BFIs to participate by submitting false details of their participation. Varun Khadka, treasurer of Nepal Financial Institution Employees Union, has expressed dissatisfaction over the mandatory participation in SSF. According to him, most of the employees of banks and financial institutions are not interested in joining SSF. He said that lack of uniformity in SSF's rules and procedure has created reservations among the employees.

He said that the unwanted pressure to include SSF in the social security scheme would not be acceptable as joining SSF would also deprive them of existing perks and facilities.

He fears that the government is intending to transfer billions of rupees of employees accumulated since the last 10 to 20 years in the Employee Provident Fund to the SSF. This mandatory provision has compelled many employees of BFIs to tender their resignations.

Roshan Koirala, head of Nabil Bank’s human resources department, said that around six employees have already resigned due to this very reason.  According to him, there are many issues of the SSF work procedure and the related Act that do not match. Amendment of only the work procedure does not make sense. SSF work procedure states that all funds of Employee Provident Fund should be kept in the SSF but the same thing is not mentioned in the SSF Act, so employees are resigning due to lack of security.

It would be more beneficial to deposit their money in banks' fixed deposit rather than joining SSF, he said. Nabil Bank is currently holding discussions over the issue of participation in SSF.

Bank and financial sector employees say that the SSF discriminates against the government and private sector employees in terms of social security facilities.

According to Saroj Kaji Tuladhar, president of the Nepal Financial Institutions Association, the monthly pension is the amount earned by dividing the amount deposited by the workers during the service period by 160. But, this amount is much less for the private sector employees than that provisioned for the government employees.

Employees are required to contribute 31 percent of their monthly salary to the social security fund, but government employees are required to contribute 6 percent to the pension fund while the government contributes 100 percent. Tuladhar said that private sector employees don’t receive pension equivalent to their contribution. So it is not appropriate to compel private sector employees to join SSF. 

Kapil Mani Gyawali, Executive Director of the SSF, said that the work procedure has been amended to accommodate everyone and will be amended in the future as well when needed. According to him, the ministry has formulated the work procedure on the recommendation of the SSF board using the authority provided by Article 70 of the Act. He claims that the second amendment to the work procedure has addressed the grievances of the contributors. However it is not possible to make any decision yet regarding the voluntary participation.

Nepal Bankers' Association had also submitted an application to the Ministry of Labor and the SSF two weeks ago objecting to some provisions. Anil Sharma, Executive Director of the Association, said that they have urged the concerned bodies to make the provisions reasonable and participation voluntary. He said that it is not justifiable to ask to choose SSF pension fund by mid-July.

According to the SSF, only a small number of commercial banks, development banks, finance and microfinance institutions have participated in the fund. So far, 2246 employees of 10 out of 27 commercial banks have been registered. Banks including Laxmi Bank, Prime Commercial Bank, Mega Bank, Nepal Credit and Commerce (NCC) Bank and Global IME Bank are listed. Three out of 18 development banks, 11 out of 20 finance companies and 40 out of 72 microfinance institutions have been registered.