1.

Key highlights of the Social Security Scheme as announced by the present Oli led

government.

The social security scheme for formal sector workers have been announced by Prime

Minister KP Sharma Oli. The scheme is set to initially include medical, health and

maternity benefit; accidental and disability benefit; benefits for dependent family

members, and old age benefit. The scheme has been based as per the contribution-based

social security regulation which is the contribution made by the workers and the

employers.

As per the contribution-based social security regulation, the following has been

mentioned:

 To avail medical treatment scheme, the contributor must have deposited their

instalment regularly in the Social Security Fund for at least 6 months,

 To avail health and maternity service, the contributor must have worked for 18

months and regularly deposited their instalment for at least 12 months,

 The accident and disability security scheme can be availed by workers from

immediately the next day after they deposit their first instalment,

 Workers can also receive compensation if they are injured in the workplace or

develop medical complications due to their work condition, however the workers

must have worked for a minimum of 2 years and deposited all instalments on

regular basis.

A worker who has fulfilled the above mentioned criteria is eligible to receive a maximum

of Rs. 700,000 from the fund if they are affected by any aforementioned cause. However,

the workers are not eligible to receive any compensation if they lose their lives due to
natural disasters or any kind of accident not related to the job. Furthermore, if the worker

dies, the fund will provide 60% of the respective workers’ basic salary as pension to the

family members who were dependent on the worker on a monthly basis. It will also

provide 40% educational scholarship every month for children below 18 years of age.

Also, if the workers do not have a spouse or an offspring then the pension amount will be

given to the workers’ parents. If a worker retires from his/her work, then the fund will

provide the worker 60% pension amount till they are alive.

The government has been levying 1% social security tax on basic salaries of all private

sector employees to raise the money required to operate the Social Security Fund.
2. What is broad banding and 401(k) plan?

Broad banding is defined as a strategy for salary structures that consolidate a large

number of pay grades into a few ‘broad bands.’ It is similar to a pay grade system, except

all jobs in a particular category are assigned a specific pay category. It evolved because

organizations want to flatten their hierarchies and move decision-making closer to the

point where necessity and knowledge exist in the organization. With broad banding, a

manager can more easily encourage his/her employees to broaden their skills and

abilities. This is valuable to organizations because employees with broad skills and

abilities are critical for the success in a total quality/continuous improvement

environment. McDonald uses this compensation philosophy in their corporate offices,

stating that it allows for flexibility in terms of pay, movement, and growth of their

employees.

Many employers offer a 401(k) retirement plan to employees as part of their benefits

package. A 401(k) plan is a retirement savings plan sponsored by an employer. It lets

workers save and invest a piece of their paycheck before taxes are taken out. Taxes aren’t

paid until the money is withdrawn from the account. 401(k) plans offer a good way for

employees to save money for their futures, and for both employers and employees to save

on taxes. If we earn $800 each pay period and elect to defer 5% of our pay, $40.00 is

taken out of our pay and placed in the 401k plan. These contributions are deducted from

our salary on a pre-tax basis. This means that by contributing to a 401k, we actually

lower the amount we pay in current income taxes. For example, instead of being taxed on

the full $800 per pay period, you are only taxed on $760. A 401k is a retirement plan, not

a savings account. Money placed in a 401k is not easy to access in an emergency.