Kazungu has already endorsed plans to outsource the collection of NSSF contributions to the Kenya Revenue Authority (KRA) in coming weeks under a mutually agreed service level agreement.
Speaking in Mombasa during the opening session of a two-day Labour and Social Welfare Parliamentary Committee retreat to fine-tune the draft NSSF Bill 2012, Kazungu stressed that the outsourcing of NSSF contribution collection to KRA will help plug unnecessary revenue leakages.
Already, Kazungu explained satisfaction that NSSF has successfully managed to outsource its investment funds management and custodial services to reputable local financial management solutions providers as part of its corporate governance reforms agenda.
The Cabinet Secretary also singled out the competitive selection and appointment of current Managing Trustee Tom Odongo, as one of the recent indicators of corporate governance reforms at NSSF.
At the same time, Kazungu also promised to urgently address the NSSF Board of Trustees gender imbalance by appointing eminent ladies to sit on the board.
While commending the NSSF board of Trustees for embarking on a reform journey, Kazungu disclosed that the Ministry of Labour, is closely monitoring the NSSF reform agenda to ensure that the public interest is upheld.
“My Ministry supports the NSSF in its reform agenda particularly as its sets out to change the nature of the scheme, governance, contribution and replacement rates in line with our constitution,” Kazungu explained.
And added: “The NSSF Bill 2012 which anchors reforms and transformation at NSSF is particularly crucial as it focuses on extending coverage and enhancing benefits for the advantage of the fund members upon retirement.”
The two day retreat hosted by NSSF for the Parliamentary Departmental Committee members among other legislators is one of the last mile engagement forums geared at fine-tuning the draft NSSF Bill 2012 set to be, tabled in parliament in coming weeks.
Alongside the Parliamentary Committee members, other delegates’ attending the retreat include: Labour Principal Secretary Ali Noor, Parliamentary Majority Leader Adan Duale, Law Scholar Arthur Eshiwani and Actuarial Expert Sundeep Raichura among others.
Speaking during the opening session, NSSF Managing Trustee Tom Odongo acknowledged that the draft NSSF Bill 2012 which received the Cabinet’s backing late last year, is set to will provide the necessary legislative foundation to facilitate efforts geared at converting NSSF from a provident fund into a public mandatory pension security scheme.
Featuring a range of enhanced corporate governance structures, the proposed NSSF Bill, Odongo said will provide enhanced social security products to existing members while increasing social security coverage through comprehensive benefits to all workers in line with the new Constitution and Vision 2030 ideals.
Pension benefits outlined in the bill include: Retirement pension, Invalidity pension, funeral grant Survivors’ and emigration benefits. Under its provident fund, members’ will enjoy tax-exempt: invalidity, withdrawal, emigration, age, and survivors’ benefits.
The proposed NSSF Bill 2012 seeks to position the fund as a public mandatory pension security scheme covering all employees in the formal sector and a voluntary scheme for the self-employed and workers in the informal sector who wish to make voluntary contributions to the Fund.
The NSSF transformation bill, Odongo further assured, remains consistent with Government policy and the tenets of the new Constitution of Kenya (Section 43), which gives all Kenyans a right to social security.
As currently drafted, the NSSF Bill 2012, corporate governance structures, he said, will be subject to the regulatory oversight of the Retirement Benefits Authority (RBA) and will comply with the provisions of the Retirement Benefits Act subject to specific modifications to cater for its unique benefits offering.
He pointed it out that the draft National Social Security Fund Bill, 2012, had been drawn to address the national social security plight and is not aimed at antagonizing existing occupational schemes that currently cover about 350,000 people excluding public service schemes.
Established in 1965, NSSF operates as a provident fund providing lump sum benefits only with limited range of benefits.
The NSSF Team Leader expressed regret that due to the current limiting structure, there has been a tendency for lump sum benefits to be poorly applied and squandered by the beneficiaries leading to growing poverty levels amongst senior citizens.
If it sails through, the NSSF transformation bill, will also help mobilise national savings as the rates of contribution to the new Pension Fund will be at 12% of pensionable earnings (basic earnings) split at a 50:50 ratio, between the employee and employer.
Currently, the Transformation bill outlines a range of Provident and pension benefits for its members. Among others, NSSF members will enjoy pension benefits payable under the Pension Fund such as a Retirement and Invalidity pension. Members will also enjoy a range of benefits including Survivors benefit, Funeral grants and Emigration benefits.
Under the provident fund, a member will be eligible for the benefit upon retirement or upon attaining the age of 50 years.
Failure to provide an expanded Social Security product under NSSF in coming years he said would be tantamount to discrimination for various sectors of the economy that are currently neither covered by NSSF nor by the private schemes.