The decision to raise senior citizen allowances from 68 to 70 years will save the government approximately Rs 10bn annually, finance ministry officials say. The government, through the budget for fiscal year 2022/23 presented by Janardan Sharma of CPN (Maoist Center) had lowered the age limit for senior citizen allowances to 68 from 70. As the growing elderly population was putting additional financial burden, the government raised the age limit to 70 from the coming fiscal year.
It was one of the recommendations made by the High-level Economic Reforms Advisory Committee led by former Finance Secretary Rameshore Khanal.
Currently, all senior citizens aged 68 and above receive a monthly allowance of Rs 4,000. The age threshold, however, will remain unchanged for targeted groups such as elderly Dalits, residents of remote areas and others qualifying under special categories. According to finance ministry spokesperson Shyam Prasad Bhandari, raising the age limit is expected to save the state Rs 10bn annually. “This measure is aimed at easing fiscal pressure and making the system more sustainable and efficient,” he told ApEx.
The government has also barred provincial and local bodies from duplicating social security programs, to avoid overlapping benefits and excessive spending. A total of Rs 109bn, roughly 5.55 percent of the national budget of Rs 1,964bn, has been allocated for all social security programs in the upcoming fiscal year. This represents a decline from previous years when social security expenses comprised over eight percent of the budget.
Khanal said limiting allowances to citizens above 70 years will help redirect funds toward capital formation. “It is not a permanent saving, but it provides temporary relief,” he said. The government also plans to integrate all social security payments with the national ID system to prevent duplication.
Economist Ramesh Paudel said the decision aligns with Nepal’s rising life expectancy, currently at 71.3 years. However, he criticized the move as symbolic rather than transformative. “Increasing the age limit might free up some funds, but it won’t significantly boost economic growth,” he said. Paudel called for a shift toward a single-window social security system focused on free education and healthcare, rather than multiple allowance categories. “Such investments have more long-term economic impact than scattered cash distributions,” he added.
According to the National Statistics Office, Nepal is on track to become an aging society by (2054/55), as the birth rate declines and the elderly population, which has already tripled since 1991/92, continues to rise.
Finance Ministry Joint-secretary Krishna Prasad Sharma called for a review of the pension system and a redesigned model for social support. “Expanding social security without systemic reforms could make it unsustainable,” he added. The number of beneficiaries is expected to increase from 3.75m this year to 3.78m next year, even with the higher age requirement, according to finance ministry officials.
