Nearly 47% of Social Security Fund Investment Parked in Fixed Deposits

The Social Security Fund (SSF) has invested nearly 47 percent of the total contributions in fixed deposits of banks, making it the single largest investment category of the government-promoted fund.

According to the SSF, 46.52 percent of the total amount collected from contributors has been placed in fixed deposits to earn interest. In total, the SSF has invested around Rs 126 billion in fixed deposits, government bonds and other sectors.

The SSF has directed close to 43 percent of its total investment into government debt instruments. Of this, 25.37 percent has gone into treasury bills, while 17.15 percent has been invested in development bonds.

Similarly, about 10.5 percent of the SSF’s total investment has been channelled into debentures, mutual funds and other financial instruments.

Speaking on the investment strategy on the Eighth Social Security Day, Krishna Adhikari, spokesperson for the Social Security Fund, said SSF has been expanding its investments in line with the investment guidelines.

“We are diversifying investments from fixed deposits to other approved sectors as provided for in the guidelines to ensure better returns for contributors,” he said. “Our goal is to provide attractive returns to contributors.”

According to the SSF, the number of listed employers has reached 22,300, while 2.641 million contributors have already enrolled in the scheme. SSF on Thursday revealed that the total amount accumulated in the Fund has now exceeded Rs 100 billion.

Under the existing legal provisions, the Social Security Fund Act allows the Fund to invest in fixed deposits and other long-term deposit instruments. The investment guidelines permit the Fund to place deposits only in Class ‘A’ commercial banks and infrastructure development banks licensed by the Nepal Rastra Bank, provided they meet the minimum criteria approved by the Fund’s investment committee.

Banks and financial institutions that have already issued ordinary shares to the public—or have signed agreements to issue public shares—are eligible to receive such deposits, the Fund said.

SSF officials, however, acknowledged that returns from fixed deposits have declined in recent years due to falling interest rates. Spokesperson Adhikari said the overall decline in bank interest rates has naturally affected the Fund’s earnings from deposits, limiting gains compared to previous years.