Law to transform NSSF set for Parliament in October

August 23, 2012

, NAIROBI, Kenya, Aug 23 – The National Social Security Fund Bill 2012 will be in presented to Parliament by October this year.

According to the Chairman of the Board of Trustees Adan Mohamed, the transformation Bill has so far received great support from the key stakeholders and is now in its final stages.

The Bill seeks to transform NSSF from the provident fund it is today, to a pension fund, a step that will see increase in contributions from the current maximum of Sh400 per month to six percent of a formal sector worker’s gross pay.

“Just to tell you that, this process started seven years ago. It has been a very long road; we have been consulting all through and we think that we have a reasonable piece of Legislation, “said Mohamed. “We know there is no perfect bill or law and that is why we have room for amendments.”

Mohamed who was speaking during a consultation meeting with the leaders from the Federation of Kenya Employers (FKE) urged on the media not criticize the Bill but explain and clarify to Kenyans its contents.

He added that the Bill will also help improve governance at NSSF which has in the recent past grabbed media attention over corruption cases.

“Investments decisions of National Social Security Fund are now taken by fund managers who are not in NSSF. And that is in line with the retirement benefits Act, “Mohamed added.

FKE chairman Erastus Mwongera said the federation supports the Bill adding that it will improve the welfare of the employees.

He however denied claims that it will increase the number employers who refuse to give the contributions on behalf of their employees despite deducting from their salaries.

“FKE is in the spirit of making this Bill. It has several penalties which all of us has to be cautious of. We are going to circulate this Bill and ask our members on how to improve it,” said Mwongera.

The Bill proposes to divide member contribution into two tiers.

The first tier of contributions will see all formal sector workers contribute a portion of their salaries equivalent to six percent of those earning the prevailing minimum wage with an equal share of contribution from their employers.

The second tier of contributions will be exclusive to those earning over and above the minimum wage, who will contribute a specified portion of their gross salaries with an equal share from employers.

Formal sector workers’ contribution to NSSF is currently split equally between the employer and employee for a total of Sh400.

The new law would also allow the NSSF pension fund to accept contributions from self-employed persons and informal sector workers.

Some of the benefits that NSSF contributors will enjoy include maternity and funeral grants as well as emigration benefits for those moving to another country.

Members will upon retirement be paid 30 percent of their total savings and the balance paid in monthly instalments.

“We will also be holding Annual General Meetings (AGM) every year to listen to all stakeholders,” said the NSSF chairperson.

NSSF which has a current membership of over 1.2 million is set to hold its first ever Annual General Meeting on September 17, since it was formed 47 years ago.

Latest Articles

Business Podcasts

Live prices

Stock Market

Most Viewed