Provident Fund
Brief History and Evolution
The origins of the formal provident fund in Nepal can be traced back to 1962 when the Employee Provident Fund Act was enacted. This made provident fund enrollment mandatory for employees of factories, mines, plantations, transport agencies, construction firms and other eligible entities.
Initially, both employees and employers contributed 6% and 4% respectively of the employee’s monthly basic salary towards EPF. Over the decades, coverage was expanded across industries and services. By 2022, over 1.5 million employees from the country’s formal workforce were EPF members.
- Employees contribute 10% of their basic monthly salary and dearness allowance.
- Employers have to match this with a 11% monthly contribution of the employee’s basic salary plus dearness allowance.
- The total monthly contribution to an EPF account is therefore 21% of the employee’s monthly basic + DA components.
- Provide financial security and adequate income to employees after retirement
- Enable employees to accumulate tax-free retirement savings throughout their working lives
- Ensure regular pension payments along with lumpsum benefits upon retiring from service
- Offer social security blanket and welfare protection to the workforce
