Retirement fund in Nepal: CIT, EPF and SSF compared, with rates and tax

A retirement fund (अवकाश कोष) is money taken from each salary, often with more added by the employer, that grows for years and is paid back when you leave a job, reach a set age, or both. The tax law gives a deduction only for an approved retirement fund (स्वीकृत अवकाश कोष), and since the Finance Act 2082 the Income Tax Act names exactly four of them.

Most salaried people are already in one without having chosen it. A private employer puts you in the SSF, because the Labour Act sends the provident fund and gratuity there. Government staff are in the EPF, and those appointed from 2076/04/01 are in the contribution-based Pension Fund. CIT is the one you usually choose for yourself, on top.

The drawing follows one month's money. Take a private job paying Rs 1,00,000 a month, 60% of it basic pay (Rs 60,000). The SSF takes 31% of the basic, not of the whole pay: Rs 6,600 comes out of your salary and the employer pays Rs 12,000 on top. About 2.67% of the basic buys medical, accident and family cover. The rest is yours: 8.33% is the old gratuity, paid when a job ends, and 20% is pension savings, paid from 60.

A CIT top-up is a separate choice. It comes only from your own pay, the employer adds nothing, and it waits in CIT until you leave the job. Rs 10,067 a month is the amount that, at this salary, saves all the tax a top-up can save; the tax section works it out. In government the pattern is different: a Section Officer appointed from 2076/04/01 pays 6% into the Pension Fund and the government matches it.

Citizen Investment Trust (CIT, नागरिक लगानी कोष) is a public institution set up under the Citizen Investment Trust Act 2047 (1991) to gather people's savings, invest them and pay them back. "CIT" on a payslip almost always means its Employee Savings Growth Retirement Fund (कर्मचारी बचत वृद्धि अवकाश कोष). CIT calls it "fully voluntary": your office deducts the amount you choose from your pay each month and sends it to CIT, into an account in your name.

CIT's FAQ says the retirement fund is open to every employee of a government or private organisation, permanent, temporary, contract or daily-wage. Its pension scheme and unit scheme are open to anyone. At the end of Asar 2083 CIT held Rs 31,927 crore in retirement funds of all kinds, up from Rs 26,664 crore a year earlier, Rs 23,233 crore of it in the employee retirement fund.

Retirement fund

3.50%

Pension scheme

4.50%

Unit scheme

4.50%

90% loan

5.00%

CIT's rate page carries one line of explanation: "मिति २०८३।०७।०१ गते देखि लागु", in force from 2083/07/01, 18 October 2026. Since then the retirement fund pays 3.50% a year and the pension scheme 4.50%. Pages that still show 3.75% and 5.00% are showing the rates from before that date.

CIT has cut the retirement-fund rate 3 times since April 2025, as bank deposit rates have fallen. This table is CIT's own rate page as the Wayback Machine saved it. Each row is the first saved copy that shows the new rate, so the actual change may have come a little earlier.

Not while you are still in the job. CIT's procedure for the retirement fund (2080, last amended 2083/02/28) pays out the whole balance in only five cases. You leave the service, which includes an accepted resignation and the end of a contract. A medical board certifies full disability. A court removes you. You die, and your nominee is paid. Or your office closes. Changing employers counts as leaving, so you can take the money then.

Instead of withdrawing, you can borrow against it. The 90% loan (सापटी) lets you take up to 90% of your balance once you have been in the scheme 6 months, at most 4 times a fiscal year. Its interest is the deposit rate plus 1.5 points, which is how 3.50% becomes 5.00%. The third amendment of 2083/02/28 shortened the wait from one year and allowed four loans a year instead of two; CIT's FAQ still states the older rule.

• Home loan: up to 20 years' starting salary as long as the collateral covers it, at most Rs 1 crore, or Rs 1.5 crore for a couple who are both in the fund, at 6.75%.
• Simple loan against land or a house, up to Rs 50 lakh, at 6.95%. Education and vehicle loans are 6.75%.
• Repaying can be done through connectIPS, eSewa or Khalti with the ID number on your CIT card, as CIT's FAQ explains.
• The final payment needs CIT's payment form with your bank account and PAN. Tax is deducted first (see the payout tax below) and credited to your PAN.

The Citizen Pension Scheme (नागरिक पेन्सन योजना) is CIT's plan for people without an employer's fund: shopkeepers, farmers, freelancers, people working abroad, or employees who want a pension on top. You pay at least Rs 500 a month, monthly, quarterly, half-yearly or yearly, for at least 15 years. From 60 you are paid every month for life.

The pension is worked out by dividing what you have saved, with interest and any bonus, by 170, CIT's FAQ says. Rs 5,000 a month for 25 years at today's 4.50% would build about Rs 27.8 lakh. That would pay about Rs 16,300 a month from 60, if the rate held. The minimum, Rs 500 a month for 15 years, builds about Rs 1,28,700, a pension of about Rs 800.

• The spouse continues it: after your death your husband or wife receives the same pension for life. After both deaths, what is left goes to your heirs.
• Locked, with exits: nothing comes back in the first 24 months. After that, you can take a lump sum only for a stated reason: losing your income, disability or emigration. After 5 years you can borrow up to 80%.
• Starting late: someone with fewer than 15 years left before 60 may join and pay the shortfall as a lump sum. Minors can join through a parent.
• Not wanting a pension at 60: CIT lets you take the money "as gratuity" instead, as a lump sum.

The Employees Provident Fund (EPF, कर्मचारी सञ्चय कोष), "sanchaya kosh", is the provident fund of government staff, public enterprises and some companies, set up under the EPF Act 2019 (1962). Its own page puts the rule in one line: "10% amount deducted from contributor's monthly salary and same amount added by the employer". Interest is worked out monthly and added once a year, and the balance is paid back when you retire or leave the office for any reason. A bill to amend the EPF Act, registered in the House in Shrawan 2083, would remove the right to withdraw 60% of savings after five years of continuous saving and allow only an advance set by the board; it was not law when reported.

EPF's rate panel shows 3.85% on provident-fund and pension-fund balances. Its archived copies first show that rate on 19 July 2026, so it is the rate for 2083/84. Like CIT's, it has fallen year after year, from 8.00% in 2079/80. Against that balance you can take a special loan (विशेष सापटी), set out below with EPF's other loans. EPF also shares part of its profit on top: it added 1.1% of the opening balance for 2080/81 and 1% for 2081/82, paid in March 2026 to about 5.78 lakh provident-fund and 96,000 pension-fund contributors.

• 2079/80: 8.00%, the board's decision for the year as reported.
• 2080/81: 7.50%, the board's decision for the year as reported.
• 2081/82: 5.50%, the board's decision for the year as reported.
• 2082/83: 5.00%, the board's decision for the year as reported.
• 2082/83, cut during the year: 4.25%, first shown on EPF's own rate panel in January 2026.
• 2083/84: 3.85%, EPF's rate panel now.

Government staff appointed before the change get the old pension, paid from the government's own budget. Staff permanently appointed from 2076/04/01 in the civil service (including the health and parliament services), the Nepal Army, Nepal Police, Armed Police Force and the Nepal Special Service are instead in the contribution-based pension (योगदानमा आधारित निवृत्तभरण) under the Pension Fund Act 2075. Teachers joined it from 2082/01/01. EPF runs it until the Pension Fund has its own organisation.

Each month 6% of your salary is deducted and the government adds the same amount (s.10). After 20 years or more of service you get a monthly pension for life (s.12): years of service × last salary ÷ 50, raised by 10% every 3 years. Leave before 20 years and you take the balance, its interest and profit as a lump sum (s.14). If you die after 20 years, your spouse gets a family pension of 50% (s.13).

For a private-sector employee the SSF is not a choice. The Labour Act 2074 (ss.52–53) tells the employer to deposit the provident fund and gratuity "in the Social Security Fund in the name of the concerned labour". The contribution is 11% of basic pay from you and 20% from the employer. About 2.67% pays for medical, accident and family cover; 8.33% comes back when a job ends; 20% waits for a pension from 60.

"How much interest does SSF give?" For 2083/84 the SSF's board set 3.2% a year on old-age savings and on the institutional and individual retirement funds, from Shrawan 1, 2083, as reported on that day. For 2081/82 it credited 5%; we did not find the 2082/83 figure. Its loans: special loans at 4.7%, and after 3 years up to 80% of your retirement savings.

The pension needs 180 months of contributions: your pension savings and their returns ÷ 160, every month for life. On a basic of Rs 40,000 the 20% part is Rs 8,000 a month. At 3.2% for 30 years that builds about Rs 48.4 lakh: a pension of about Rs 30,200 a month, before any pay rise.

All three funds lend and deposit through the same banks, so their rates follow bank rates. NRB's average fixed-deposit rate at mid-July was 10.13% in 2023 and 5.79% in 2025; the average top FD rate in Kartik 2083 is about 4.01%. EPF went from 8.00% in 2079/80 to 3.85% in 2083/84, 4.15 points lower. CIT's retirement fund went from 5.00% in April 2025 to 3.50%.

The rates are now below the 5.5% inflation NRB projects for 2083/84. Money left at 3.50% loses about 1.9% of its buying power a year, a negative real return. That does not make these funds a bad deal. What you gain comes mostly from the employer's share and the tax saved, as the next sections show. The rate alone is not where the value is.

Gratuity (उपदान) is money an employer owes you for the years you worked, paid when the job ends. The Labour Act 2074 (s.53) makes it 8.33% of your basic pay every month, from your first day. That is one twelfth, so each year of work earns about one month's basic pay. The employer deposits it in the SSF, where it becomes the "retirement savings" part paid out when you leave. An employer in the SSF meets this duty through the 20% it pays (s.57).

On a basic of Rs 40,000, gratuity is Rs 3,332 a month, Rs 39,984 a year, and Rs 4.0 lakh over 10 years before the SSF's return. Under the old Labour Act 2048, as an accounting firm summarises it, you qualified only after 3 years. You then got half a month's pay a year for the first 7 years and two thirds of a month for years 7 to 15: about Rs 2.2 lakh for the same 10 years.

• No gratuity with a pension: "Any labour who is entitled to pension shall not get the gratuity" (s.53(7)).
• Organisations outside the SSF, or with old gratuity balances, can hold them in CIT's gratuity fund, which pays 2.75%. Siddhartha Bank moved its staff gratuity and retirement funds to CIT in July 2025.
• Tax: gratuity paid out of an approved fund as a lump sum is taxed like any retirement payout, at 5% of the part above half or Rs 5 lakh (below).

Until 2082 a bank or company could run its own staff provident or gratuity fund and ask the Inland Revenue Department to approve it, so that staff could deduct their contributions. The Finance Act 2082 removed that power: section 63(1), under which IRD approved a fund on application, is struck out.

In its place the Act now defines an approved retirement fund as only the four below. So the "list of approved retirement funds in Nepal" is short, IRD no longer approves others, and a fund's own page that still says "approved by IRD" may be out of date.

• The Employees Provident Fund, under the EPF Act 2019.
• The Citizen Investment Trust, under the CIT Act 2047.
• The retirement fund run by the Social Security Fund, under the Contribution-based Social Security Act 2074.
• The retirement fund run by the Pension Fund, under the Pension Fund Act 2075.

Cap a year

Rs 5 lakh

Or of income

one third

Life insurance

Rs 40,000

Health insurance

Rs 20,000

Money you put into an approved retirement fund comes off your taxable income, but only up to a limit. Rule 21 of the Income Tax Rules sets it: Rs 5,00,000 or one third of your assessable income (निर्धारणयोग्य आय), whichever is less. You can never deduct more than you actually paid in, so the deduction is the least of three: what you paid, one third of income, and Rs 5,00,000.

It is one limit for all your funds together, not one per fund. The SSF, EPF, CIT and the Pension Fund all count against it. The employer's share counts too: its 20% into the SSF is added to your income and then deducted. The limit was Rs 3,00,000 for anyone outside the SSF until the Rules' fifteenth amendment of 2081/02/15. Since FY 2081/82 everyone has the same Rs 5,00,000, and IRD's guide to the Finance Act 2083 lists no change for 2083/84.

There is a second, smaller benefit. The first band of tax, 1% on income up to Rs 10,00,000, is the social security tax, and SSF contributors do not pay it. So for someone in the SSF whose taxable income stays under Rs 10,00,000, the tax is already nil, and a CIT top-up cannot cut it further.

Here are three monthly salaries, each with basic pay at 60%, worked through the site's tax calculator for 2083/84. Each is worked twice: in the SSF, and not in any fund, as at an employer that has not joined the SSF. "With CIT" means paying into CIT the room left under the cap: one third of income or Rs 5,00,000, less what the SSF already takes.

• Rs 50,000 a month: in the SSF, the tax is Rs 0 before any CIT, because taxable income is under Rs 10,00,000 and the 1% band is waived. CIT saves nothing here. With no fund, CIT of up to Rs 2,00,000 a year saves Rs 2,000, 1% of what is put in.
• Rs 1,00,000 a month: in the SSF, Rs 2,24,800 of room is left, but only the first Rs 1,20,800 (Rs 10,067 a month) saves tax, Rs 12,080 at 10%. That brings taxable income down to Rs 10,00,000, where the tax stops. With no fund, the full Rs 4,00,000 saves Rs 22,000.
• Rs 2,00,000 a month: the SSF's own 31% nearly fills the Rs 5,00,000 cap, leaving Rs 53,600 (Rs 4,467 a month); CIT there saves Rs 10,720, 20% of each rupee. With no fund, Rs 5,00,000 of CIT saves Rs 1,00,000.

Each Shrawan, or when you join, HR may ask how much CIT to deduct each month, because CIT's retirement fund is paid through payroll: the office takes it from your pay and sends it to CIT. The question is really two. How much tax would it save? And can you leave that money untouched until you leave the job? Saving tax at 10% or 20% is an instant return no fund rate can match. A rupee that saves no tax just earns 3.50% and is locked.

At Rs 1,00,000 a month in the SSF, the useful top-up of Rs 10,067 a month lowers take-home pay by Rs 1,08,720 over the year. That is the Rs 1,20,800 paid in less the Rs 12,080 of tax saved. The Rs 1,20,800 is still yours, in CIT.

1. 1Read your payslip for basic pay, allowances, the SSF or EPF lines and any CIT already deducted.
2. 2Work out the room: one third of your yearly income including the employer's SSF share, capped at Rs 5,00,000, less everything already going into the SSF, EPF or another approved fund.
3. 3Check where it lands: in the SSF with taxable income under Rs 10,00,000, CIT saves no tax. Above it, each rupee saves 10%, 20% or more, the band your top income falls in.
4. 4Choose a monthly amount up to the part that saves tax, then test it in the income tax calculator.
5. 5Plan for the lock: keep an emergency fund in the bank first. CIT's 90% loan is there after 6 months, but it is a loan.
6. 6Tell HR in writing and check the next payslip and your CIT statement on CIT's e-service or app.

When a retirement fund pays you a lump sum, the tax is small and it is withheld for you. Section 65(1)(b) of the Income Tax Act first takes off half the payment or Rs 5,00,000, whichever is more. The rest is treated as a gain, and section 88(1) taxes the gain at 5%. Before the Finance Act 2075 that rate was 6%, which some pages still give.

This retirement payment (अवकाश भुक्तानी) tax is a final withholding under section 92(1)(छ): the fund deducts it, credits it to your PAN, and you need not add the payout to a tax return. A pension paid every month is left out of that rule. CIT's FAQ puts the same rule in rupees: nothing on a balance up to Rs 5,00,000; up to Rs 10,00,000, Rs 5,00,000 off and 5% on the rest; above that, 5% on half.

For most people the question does not arise, because the law decides between the SSF and the EPF. A private employer has to put you in the SSF. Government and public-enterprise staff are in the EPF, and those appointed from 2076/04/01 in the Pension Fund. CIT is not a rival to either. It is a choice you make on top, and the two questions to ask about it are tax and lock-in.

• The employer's share is the biggest return. In the SSF, every Rs 100 taken from your pay puts Rs 258 into savings in your name, your own Rs 100 included (28.33% of basic for your 11%), before any interest. No fund rate comes close.
• The tax deduction is the second. In the 10% or 20% band, a CIT rupee saves 10% or 20% at once. Below the SSF's 1% waiver line it saves nothing.
• The interest rate is the smallest part, and it is now below inflation in all three: 3.2%, 3.85% and 3.50%. Comparing the funds by rate alone misses most of the value.
• Access differs. CIT and EPF pay a lump sum when you leave, with cheap loans before; the SSF keeps its pension part until 60. If you might need the money within a few years, a top-up you cannot touch is the wrong place for it.
• Beyond the cap, no fund gives a deduction. Extra saving for the long run can go into a fixed deposit, a SIP or mutual funds, each with its own risk and tax.

Rupees in 30 years will not buy what they buy now. To compare honestly, count everything in today's money: what a future sum would buy at today's prices, at 5.5% inflation a year. Say you save Rs 10,000 a month and raise it each year in step with prices, so it is always worth Rs 10,000 of today's money. Over 30 years you put in Rs 36.0 lakh of today's money.

If CIT's rate today, 3.50%, held for all 30 years, the balance would be worth about Rs 26.9 lakh in today's money: less than you put in. At an illustrative 8%, a mix with shares that no fund here promises, the same saving would be worth about Rs 53.5 lakh. The chart shows all five.

It depends on the income you want, for how long, and what the money earns while you draw it. Here is one worked case with every assumption stated. You are 30, will stop work at 60, and want Rs 50,000 a month of today's buying power for 25 years, to 85. Prices rise 5.5% a year, and the withdrawals rise with them.

If the money earns exactly the inflation rate, you need Rs 50,000 × 300 months = Rs 1.50 crore of today's money. If it earns less, as a fund at 3.50% does now, you need more; at an illustrative 8%, less. The table gives all three, with the monthly saving from 30 that reaches each. That saving is the first year's amount, raised 5.5% a year with pay, and it counts everything going in, the employer's share and your own.

In the rupees of 60 those sums are about 5.0 times larger: Rs 9.57 crore, Rs 7.48 crore, Rs 5.64 crore. A fixed Rs 50,000 that never rises needs less: about Rs 99.9 lakh at 3.50%, or Rs 64.8 lakh at 8%, for 25 years. But after 15 years it buys what Rs 22,400 buys at the start.

First decide which Rs 50,000 you mean. Rs 50,000 in 30 years will buy what about Rs 10,000 buys today. To have Rs 50,000 of today's buying power at 60, a 30-year-old would need about Rs 2,49,200 a month then. With that settled, each fund's own pension rule turns the monthly amount into a balance.

In CIT's pension scheme the pension is the balance ÷ 170, so Rs 50,000 a month needs Rs 85.0 lakh. At 4.50% that takes about Rs 11,200 a month for 30 years, Rs 21,800 for 20, or Rs 5,500 a month at first if you raise it 5.5% a year. In the SSF the pension part ÷ 160 needs Rs 80.0 lakh: at 3.2%, a basic pay of about Rs 66,100 a month for 30 years, since 20% of basic goes into it.

CIT's ÷ 170 is generous next to drawing the same Rs 85.0 lakh yourself at 3.50%, which would last 19 years and 8 months, while CIT pays for life and then to your spouse. It is CIT's rule, and CIT can change it.

"Retirement age" means two different things. One is the age at which an employer must let you go: 58 under the Labour Act for anyone in regular employment, and 58 in the civil service. The other is the age at which a fund starts paying a pension: 60 in the SSF and in CIT's scheme. A private employee retiring at 58 therefore waits 2 years for the SSF pension, though the gratuity part is paid when the job ends.

A Federal Civil Service Bill would raise the civil-service age to 60. The House passed a version in June 2025. A new draft was still under legal review in July 2026, when the Law Ministry said its retirement clause conflicted with existing law, so 58 stands for now.

People who search "CIT share price" are often thinking of their CIT savings. They are two different things. Citizen Investment Trust is itself a listed company: its shares trade on NEPSE, and a shareholder gets its profits and dividends, along with the risk of a share price. Your retirement-fund balance is a separate account in your name, paid back at CIT's declared rate, and it does not move with the share price.

Owning CIT's shares gives no tax deduction and does not count as a retirement contribution. Buying them works like buying any share, as in share market in Nepal for beginners. We give no price and no view on the share.

1. 1Find out which fund you are in from your payslip: SSF (your SSID), EPF (your EPF ID or UCIN) or a company fund. Ask HR if it says only "PF".
2. 2Log in and read your statement: sosys.ssf.gov.np or the SSF app, login.epf.org.np or the EPF app, CIT's e-service or app. Check that every month is there.
3. 3Update your KYC and nominee in each, so a claim or a payout to your family is not held up.
4. 4Work out your tax room in the income tax calculator and decide on CIT with the steps above.
5. 5Keep three to six months of spending in the bank before locking money away; the FD calculator shows what a deposit earns.
6. 6Look again each Shrawan, when pay, slabs and fund rates change. Pay scales are in government salary in Nepal, and your own take-home is in the salary calculator.