Published draft Bill seeks to broaden NSSF pension mandate

By Jackson Okoth

It will soon be possible for those in the informal sector or self-employment to contribute to a State sponsored pension scheme.

This is in line with provisions in the new Constitution, which gives all Kenyans a right to social security.

A draft Bill that will transform statutory social security solutions provider National Social Security Fund (NSSF) from a provident fund to a pension scheme has been published.

The draft National Social Security Pension Trust Bill 2012 seeks to convert NSSF from its current status to a social insurance scheme, will also facilitate repealing and replacement of the NSSF Act, Cap 258.

“The Sh110 billion fund is actively seeking to win the support of various stakeholders in its bid to transform,” said NSSF Chairman Adan Mohammed. He spoke yesterday during a stakeholders’ session with officials from the Central Organisation of Trade Unions (Cotu) and Federation of Kenya Employers.

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 The Transformation Bill seeks to position NSSF as a public mandatory defined contribution scheme for employees in the formal sector and a voluntary social security scheme for the self-employed.  Available figures indicate a low pension coverage with an estimated 350,000 people out of the two million people engaged in the formal sector contributing to a pension scheme.

 monthly benefit

“This Bill will change the way we currently operate. Once it becomes law, it will be possible to provide unemployment benefits to those who lose their jobs while also providing maternity grants to pregnant women,” said Mohammed.

All contributors will be entitled to Sh10,000 for the next six months as unemployment benefit, a period during which one is expected to have secured another job.  Salaried workers will be expected to contribute six per cent of their basic pay to the NSSF while employers also contribute six per cent, bringing the total contribution to 12 per cent.

 This is an improvement from the present arrangement where only 10 per cent of one’s gross pay is deducted as contribution to the NSSF.

 Discussions of the draft NSSF Trust Bill is happening at a time when the Fund is preparing to hold its Annual General Meeting, the first of its kind in the organisation’s 47 years of existence.  “We support this Bill which will cater for the social security needs of those in the informal sector currently without any pension scheme,” said Cotu Secretary-General Francis Atwoli.