Social Security Fund (SSF) in Nepal: A Complete Guide for Employers and Employees

The Social Security Fund (SSF, सामाजिक सुरक्षा कोष) is Nepal’s contribution-based social protection system for private and formal-sector workers. Employers and employees together deposit 31% of the employee’s basic salary every month, and in return the worker gets medical, maternity, accident, disability, dependent-family and retirement protection.

For employers, SSF is a legal compliance requirement. For employees, it replaces the old mix of Provident Fund, gratuity and social security tax with one combined fund. For both, it carries real tax advantages that many businesses still do not use properly.

Legal basis and how SSF has evolved

SSF runs under three main instruments, supported by the Labour Act 2074 and the Income Tax Act 2058:

Instrument	Date	What it does
Contribution Based Social Security Act, 2074	13 August 2017	Creates the contribution-based system and its schemes
Contribution Based Social Security Regulations, 2075	19 November 2018	Sets registration and participation procedures
Social Security Schemes Operational Directives, 2075	22 November 2018	Sets day-to-day scheme rules, benefits and claims

The Fund began as a body meant to manage the 1% Social Security Tax. Because a tax-only model was not enough, the government moved to a contribution-based model, and the first schemes rolled out in 2019.

Since then, coverage has widened beyond formal-sector employees. SSF now runs schemes for:

Formal-sector employees: 31% of basic salary (20% employer, 11% employee)
Migrant workers abroad: 21.33% of basic salary, paid entirely by the worker
Self-employed persons: 31% of declared basic income, paid entirely by the contributor
Informal-sector workers: 20.37%, shared between the worker (9%) and local government (11.37%)

Rules change through directives and the annual Finance Act, so always check the latest notices on ssf.gov.np before advising.

Who must join, and who can join

Every registered employer in the formal private sector must enroll itself and its employees, regardless of headcount. There is no small-business exemption.

Mandatory coverage

Private companies, firms and public enterprises with employees
Permanent, temporary, contract, part-time and work-based staff, all of whom fall under SSF under both the Labour Act and the Social Security Act

Voluntary coverage

Self-employed persons and professionals (doctors, lawyers, consultants, shop owners)
Nepali workers in foreign employment
Informal-sector workers under the local-government-supported scheme

Enrollment itself is free of charge. Late enrollment exposes the employer, not the employee, to legal risk.

How much is contributed

The total contribution is 31% of the employee’s basic salary, not gross salary. It replaces the older Provident Fund, gratuity and social security tax deductions. The split is:

Paid by	Component	Rate of basic salary
Employee	Provident fund	10%
Employee	Social security tax portion	1%
Employer	Provident fund	10%
Employer	Gratuity	8.33%
Employer	Additional contribution	1.67%
Total		31%

Example: For a basic salary of NPR 50,000 a month, the employee contributes NPR 5,500 and the employer NPR 10,000, so NPR 15,500 goes to SSF every month.

Deadline: Contributions must be deposited by the 25th of the following month. Payment can be made by bank deposit, ConnectIPS or digital wallets such as eSewa, Khalti and FonePay.

The four benefit schemes

The 31% is split across four schemes. Most of it goes to retirement:

Scheme	Share of basic salary	What it covers
Old-age (retirement) security	28.33%	Pension or lump sum at retirement
Accident and disability	1.40%	Treatment, disability allowance and income support after an accident
Medical treatment, health and maternity	1.00%	OPD and inpatient treatment, maternity care and allowance
Dependent family	0.27%	Monthly allowance to spouse and children if the contributor dies

Key points contributors ask about most:

Pension: paid to contributors over 60 who have contributed for at least 15 years. Those who do not meet the 15-year condition are paid out under the scheme’s separate rules.
Medical cap: OPD and inpatient expenses were capped at NPR 100,000 per fiscal year. Check the current limit, as it is revised from time to time.
Dependent family: the spouse receives 60% of the last basic salary as a monthly allowance, and up to two children share 40%.
Early enrollees: employees enrolled on or before 31 Ashadh 2078 (15 July 2021) can allocate the full 28.33% to retirement and withdraw on leaving the job or at 60.

Registration and monthly compliance, step by step

Registration is done online on the SSF portal. A typical workflow:

Register the employer. Create the employer account on the SSF portal with the company registration certificate, PAN/VAT certificate, address details and authorised person’s details.
Get the employer ID. Once SSF verifies the documents, the business receives its SSF employer number.
Enroll each employee. Enter citizenship details, photo, basic salary, joining date and nominee details. Each employee receives an SSF contributor ID.
Run payroll correctly. Deduct 11% of basic salary from the employee and add the 20% employer share.
Deposit monthly. Pay the full 31% by the 25th of the following month and upload the contribution details on the portal.
Update changes. Record new joiners, resignations, salary revisions and transfers between employers promptly.
Reconcile and report. Match portal records with payroll and accounts each month, and complete the annual contribution summary.

Documents employers should keep ready: company registration certificate, PAN certificate, employee citizenship copies and photos, appointment letters, salary sheets and bank deposit receipts.

How SSF reduces your tax

SSF gives employees two direct tax benefits under the Income Tax Act 2058 and the annual Finance Act.

1. The 1% Social Security Tax is waived. Normally the first slab of income (NPR 10,00,000 for individuals) is taxed at 1%. For SSF contributors this 1% is not levied, so the first slab becomes effectively tax-free. That saves up to NPR 10,000 a year for an individual .

2. Contributions are deductible. The employer’s 20% is first added to the employee’s income, then the total retirement contribution (SSF, EPF and CIT combined) is deducted, up to the lower of NPR 500,000 or one-third of assessable income.

Worked example (individual, basic salary NPR 50,000 a month, no other income):

Item	Amount (NPR per year)
Basic salary	600,000
Add: employer’s 20% SSF contribution	120,000
Assessable income	720,000
Total SSF contribution (31%)	186,000
Deduction limit (lower of 500,000 or one-third = 240,000)	240,000
Deduction allowed	186,000
Taxable income	534,000

Because of the waiver, the first NPR 500,000 of that taxable income carries no tax at all. Without SSF, the same employee would pay 1% on that slab.

Planning points for employers and employees

Structure basic salary realistically. A very low basic salary reduces SSF benefits and the deduction, and can draw scrutiny.
Use remaining headroom under the NPR 500,000 limit with CIT or an approved retirement fund, since the limit is shared.
Life insurance (up to NPR 40,000) and health insurance deductions are separate and still available.
For employers, SSF contributions are a deductible staff cost, provided they are actually deposited on time.

Slabs and limits are reset each year by the Finance Act, so confirm figures for the current fiscal year before filing.

Can you claim treatment at a non-SSF hospital?

Generally, no. SSF medical benefits are tied to its listed hospitals, and contributors have been refused reimbursement for treatment at non-listed hospitals, even in critical emergencies.

What many contributors miss is that listed hospitals come in two tiers:

Hospital type	How you pay	How you claim
Online-agreement hospitals	Pay only 20% by showing your SSF ID card	Hospital settles the rest with SSF directly
Other listed hospitals	Pay the full bill first	Submit documents to the SSF office for reimbursement
Non-listed hospitals	Pay the full bill	Generally not reimbursable

How to protect yourself

Check the list early. Look up listed hospitals near your home and office on ssf.gov.np before you need one.
In an emergency, get stabilised at the nearest hospital, then move to a listed hospital once it is safe, so later treatment is claimable.
For referrals, confirm with SSF in advance whether referred treatment qualifies, and keep the referral letter.
Ask before admission. Call the SSF office with the hospital name and get confirmation, ideally in writing.
Add private health insurance. A policy with an outside-network reimbursement clause fills the gap. Read the clause carefully, as some policies exclude outside-network treatment even in emergencies.
If rejected, file a written review request with SSF citing the emergency. It is not guaranteed, but it creates a record.

Common problems and practical tips

Problem	Practical fix
Late monthly deposits	Set a payroll calendar that deposits well before the 25th
Employees not enrolled on joining	Make SSF enrollment part of the onboarding checklist
Basic salary set unrealistically low	Align basic salary with the Labour Act minimum and actual pay structure
Portal records not matching payroll	Reconcile SSF statements with payroll and the ledger every month
Medical claims rejected	Use listed hospitals and keep complete bills, prescriptions and discharge papers
Staff unaware of their benefits	Give every employee a one-page SSF benefits briefing
Old PF and gratuity balances unclear	Document balances and follow SSF rules for transfer or settlement

How a Chartered Accountant can help

SSF touches payroll, tax, accounting and labour law at once, which is why a CA is well placed to manage it. Services we offer include:

SSF registration for employers and enrollment of employees
Monthly contribution calculation, deposit and portal reconciliation
Payroll and salary-structure review for compliance and tax efficiency
Tax planning around the retirement-contribution deduction and SST waiver
SSF compliance checks as part of statutory audit
Guidance on medical, maternity and accident claims
Staff awareness sessions on SSF benefits

Conclusion

SSF is not just another deduction. Used properly, it gives employees health, accident and retirement protection while lowering their tax, and keeps employers on the right side of the law. The main gaps are practical: late deposits, poor records and claims at non-listed hospitals. A little planning closes all three.

Need help registering your business or reviewing your SSF compliance? Get in touch for a consultation.

Disclaimer: This article is for general information and reflects rules as understood at the date above. SSF directives, tax slabs and limits change regularly. Please confirm current rules with the Social Security Fund or a qualified professional before acting.

Sources

This article is general information, not advice for your situation. See the disclaimer.