Kathmandu, June 15: The government is preparing to introduce a mandatory retirement scheme that would remove civil servants who have either completed 30 years of service or reached the age of 55. To implement the plan, it is finalizing amendments to the Federal Civil Service Act, although it has yet to decide whether to proceed through an ordinance or a bill.
The draft is in its final stage and under review at the Ministry of Law. Once cleared, it is expected to be sent to the Cabinet. Nepal’s current retirement age for civil servants is 58, but the proposed amendment would lower the effective exit threshold to 55 years or 30 years of service.
Officials say the proposal does not include any voluntary retirement option or special compensation package. Employees have dubbed it an “iron handshake” scheme, arguing that it forces retirement rather than offering a choice.
According to data from the Civil Service Records Office, 13,877 employees would leave service if the proposal becomes law. Those affected include 52 secretaries, 268 joint secretaries, 760 under-secretaries, 923 section officers and 6,438 non-gazetted employees. Hundreds of health service and provincial employees would also be forced into retirement.
Of the total, 7,772 would retire because they are 55 or older, while 6,105 would leave after completing 30 years of service.
The proposal has triggered anxiety across the bureaucracy. Civil servants say they remain uncertain because the government has not clarified whether it will use an ordinance or take the proposal through Parliament.
Some officials believe the government may opt for an ordinance before mid-July. Doing so would allow retirements to take effect before annual salary adjustments, reducing future pension liabilities.
Although the government has not publicly announced the scheme, officials say the budget has already set aside Rs 25 billion for retirement-related expenses. Estimates suggest the overall cost could reach Rs 55 billion once pensions and other obligations are included.
Economist Chandramani Adhikari warns that the policy could create a long-term financial burden. Retired employees would receive pensions, while the government would eventually need to recruit replacements and pay full salaries and benefits. Recruitment and training would add further costs.
He also argues that the move raises human and administrative concerns. Employees hired with the expectation of serving until 58 could challenge the policy in court. A similar retirement scheme introduced in 1992 led to legal disputes, with some affected employees later reinstated.
Critics say the government may face higher costs, legal challenges and disruption to public administration, even as it seeks to reduce the size of the bureaucracy.
People’s News Monitoring Service
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