KATHMANDU: The government is set to implement a contribution-based social security system for all government employees appointed from the upcoming fiscal year, replacing the traditional pension and gratuity system, according to the Ministry of Finance.
In a circular issued to all ministries, Nepal Rastra Bank, Nepal Insurance Authority, Securities Board of Nepal, and all public institutions, boards, committees, and authorities, the Finance Ministry has instructed that arrangements be made to apply the new system starting from the next fiscal year.
The ministry has made it clear that any financial liability incurred by failing to implement the contribution-based model will not be borne by the government.
This move aligns with the government’s policy framework aimed at ensuring long-term financial sustainability in public institutions. The Contribution-Based Social Security Act, 2017 and the Retirement Fund Act, 2018 have already been enacted to provide a legal foundation for such reforms.
Although the contribution-based retirement plan has been in effect for government employees since 2018, many public regulatory bodies, institutions, and boards continue to follow the pension and gratuity system.
The Finance Ministry said that several government-funded institutions continue to create long-term liabilities by offering pension benefits without setting aside sufficient internal resources, ultimately depending on the state budget to meet those obligations.
The decision to implement the new system follows a directive made by the finance minister on July 4, and relevant authorities have already been informed for its effective enforcement, the ministry confirmed.
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