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The Nepal government is all set to replace the existing pension and gratuity system for newly appointed public employees with a contribution-based social security scheme, marking a major shift in the country's public sector benefit framework from coming fiscal year (FY) 2025/26.
The Ministry of Finance has formally circulated a directive to all ministries, regulatory bodies, public enterprises, boards, committees, and government-owned institutions to make necessary arrangements for the implementation of the new system.
The ministry has also clarified that the government will not bear any financial liabilities arising from the failure to implement the contribution-based model.
This move aims to ensure long-term sustainability of the public finance system and to align employee welfare with global best practices in social security.
The contribution-based scheme is expected to apply to all employees recruited on or after the start of FY 2082/83 and will operate under a structured contribution mechanism rather than the traditional state-funded pension and gratuity provisions, reads a press note issued by the Finance Ministry.
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