Situation and Priorities

Social protection situation

The 2015 Constitution recognizes social security as a fundamental right, in particular to vulnerable groups and workers, and guarantees free basic health service to all citizens. The 16th National Development Plan (2022/23 to 2026/27) intends to continue the extension of social protection in Nepal through a life-cycle approach within a sustainable financing framework. It emphasizes expanding contribution-based social security to all workers including those in the informal sector as one of the key strategies to ensure the constitutional right to social protection. The aim is to increase social protection coverage from 32 to 60 percent of the population by 2026/27 and to decrease the proportion of informal employment from 62 to 40 percent.

Access to social security for people of working age is the least prevalent form of social protection in Nepal. Only 9.9 per cent of the total population between 15-59 years have access, leaving approximately 16.9 million working-age people unprotected. Both non-contributory and contributory measures have low levels of coverage for working age (5.3 per cent and 4.3 per cent of the population, respectively). This may be because mandatory social security schemes under the Social Security Fund (SSF) were recently implemented and limited to formal workers, while non-contributory measures are targeted to specific categories. Despite existing gaps, Nepal is making robust strides to guarantee the constitutional right to social protection for all in the country.

The Civil Service Act (Third Amendment, 2014), the Labour Act, 2017, the Health Insurance Act, 2017, the Contribution-based Social Security Act, 2017, and the Right to Employment Act, 2018 provide the legal framework for several programmes, from pensions for the public sector, minimum employment guarantee programmes, cash allowances and social insurance schemes for the private sector.

Nepal has made progress in extending social protection to Nepali workers in foreign employment and their families, notably through amendment in the Contribution-based Social Security Rules, which introduced mandatory enrolment into the Social Security Fund (SSF) as part of the labour permit process. However, effective coverage remains questionable: while over 2 million migrant workers were registered with the SSF until 2025, only around 2 per cent of those continued contributing after the enrollment. Sustaining participation is a key challenge, due to the lack of proper understanding, uncertainty of contributions, low awareness, and administrative and access barriers.

Migrant worker-specific other protection measures such as welfare fund and term-life insurance scheme continue to play a critical role but remain fragmented and often not well aligned with the national system. Portability of social protection schemes often provided in the destination countries is another challenge. Strengthening coherence between unilateral social protection mechanisms, improving enrolment and claims processes, and enhancing coordination with countries of destination for progressive portability and exportability discussions are key priorities to ensure adequate and effective social protection for Nepali migrant workers across the migration cycle.

As a pathfinder country of the UN Global Accelerator on Jobs and Social Protection for Just Transition, Nepal has developed a national roadmap which is at the adoption stage by the government, with expansion of social protection as one of the three priority areas for action. The National Planning Commission formulated an Integrated National Social Protection Framework to make the national social protection system more integrated, inclusive, flexible, and accessible to all citizens. The implementation of this instrument will support the streamlining of existing schemes and close any coverage and adequacy gaps in the system, with the support of the Global Accelerator.

Government and social partner priorities

• Extend coverage to 60 per cent of the population with basic social protection schemes by Fiscal Year (FY) 2026-27.
• Extending the coverage and effectiveness of contribution-based social security to workers in the informal sector, self-employed, and workers in foreign employment.
• Decentralize the operations of the Social Security Fund, and improve its management and information systems.
• Measures to reform and consolidate thinly spread, scattered and overlapped social security schemes to improve resource efficiency, coverage and adequacy.