The board of directors of the Social Security Fund has announced the interest rates applying for the fiscal year 2023-24 (2080/81).
The rates govern interest on the various ways fund balances are used: what accrues on a contributor’s accumulated contribution, what is charged on loans drawn against the retirement fund, and what applies where loan installments fall into default.
This note sets out each rate and what it applies to.
The Announced Rates
| Scheme or facility | Rate | Applies to |
|---|---|---|
| Old Age Security Scheme | 7.5% per annum | Accumulated contribution |
| Special Loan | 8.3% per annum | Loans from the retirement fund |
| Home Loan and Education Loan | 9.25% per annum | Housing and education borrowing |
| Defaulted loan installments | 1% per annum | Charged as compensation |
Old Age Security Scheme
Interest of 7.5% per annum accrues on a contributor’s accumulated contribution under the Old Age Security Scheme. This is the return credited on the balance built up through employer and employee contributions, rather than a charge.
Borrowing Against the Fund
Two separate lending rates apply to money drawn from the fund.
- Special Loan, 8.3% per annum: the rate on loans taken from the retirement fund.
- Home Loan and Education Loan, 9.25% per annum: the rate on borrowing for housing and education purposes.
Defaulted Installments
Where loan installments are not paid when due, a further 1% per annum applies as compensation, on top of the interest already running on the loan.
Why the Rates Matter
These rates, as released by the Social Security Fund, govern interest on the various fund utilisation scenarios. For employers they affect what staff can expect on their accumulated balances and what borrowing against the fund will cost; for contributors they determine both the return on savings and the price of drawing on them.
Rates are set for a given fiscal year, so confirm the figure applying to the year in question before relying on it.
Key Contacts
If you have any questions or would like to know how this might affect your business, get in touch with Prakrit Shrestha, Attorney at Law, Managing Partner, or Dechen Gurung, Attorney at Law, Senior Associate. You can also contact the firm directly, or read more about our HR and labour law services.
Read the Original Briefing
The full briefing, including the original formatting, is reproduced below and available to download.