This follows a consultative meeting between the Federation of Kenya Employers (FKE) and Labour Cabinet Secretary Kazungu Kambi/FILE
This follows a consultative meeting between the Federation of Kenya Employers (FKE) and Labour Cabinet Secretary Kazungu Kambi.
In a statement after the meeting, Kambi said the move will allow smooth implementation by ensuring all stakeholders are familiarised with the new law.
“In the meantime, contributions will be made as per the provisions of the old Act. This will allow for substantive implementation of the provisions of sections 18, 19 and 20, and the general need to educate all stakeholders on implementation of the Act,” Kambi said.
FKE on its part said employers were not opposed to the Act but needed more time for further engagement and discussions on the modalities including the payment structures and the rules and regulations required for smooth implementation.
“It is important that both employers and employees are well prepared for the implementation of the Act to ensure the noble intentions succeed in ensuring that workers enjoy a decent life upon retirement,” FKE Executive Director Jacqueline Mugo noted.
In the new Act, the pension contribution will be 12 percent of the set pensionable earnings, with employees remitting six percent and six percent from the employer, subject to an upper limit of the Sh2,160 for employees earning above Sh18,000. The lower earnings limit will be Sh6,000.
Contributions for people earning above Sh18,000 will however be divided into two levels of accounts which will be referred to as Tier I and Tier II.
In Tier I account, contributions will be up to Sh720 while in Tier II it will be the balance of the contributions of earnings between the minimum and up to the maximum which is Sh1,440.
For employers wishing to opt out, Tier II contributions can be put in an established separate pension fund in the company but contributions for Tier I must be made to NSSF.
The separate retirement pension scheme must be approved by the Retirement Benefits Authority (RBA) with a prior notice of 60 days.
NSSF will also be transformed from a national provident fund into a pension scheme, a move that will allow self employed Kenyans to make their contributions which will be a minimum of Sh200.
About The Author
