NSSF projects annual collections to hit Sh118b as new members come in

CEO NSSF Richard Langat at a Nairobi hotel during a breakfast meeting with PUSETU leaders to discuss implicationsof new NSSF ACT.[PHOTO: FIDELIS KABUNYI]

NAIROBI, KENYA: The National Social Security Fund (NSSF) expects to collect Sh118 billion per year from contributors, once it becomes a pension scheme. It is estimated that the value of total assets under NSSF control would be Sh742 billion, pushing it to the top of pension schemes in Kenya.

This is expected to happen when the new NSSF Act 2013 - whose implementation is delayed due to numerous court injunctions by both individual unions and employers - is fully rolled out and all workers in the formal, informal sectors as well as those in self-employment are roped in.

"While we are on course and ready to implement the new NSSF Act, there are pending cases in court that are preventing us from moving forward," NSSF CEO and Managing Trustee Richard Langat said Thursday during a media workshop aimed at unpacking the NSSF Act 2013.

The new NSSF Act has two sections, Tier I which is mandatory to all and Tier Two, which is optional for those employers already with an existing pension scheme of their own.  For instance, a worker earning a gross salary Sh6,000 will pay 6 per cent of this amount or Sh360 to the NSSF.

This is the same contribution to be made by the employer bringing the total to Sh720 or 12 per cent. This is the same amount that one earning Sh500,000 will bring to NSSF under the mandatory Tier I. The amount of contributions will change in year two when the lower earnings limit changes to Sh7,000, Sh8000 in year three and Sh9,000 in year four.

Although the NSSF Act No 45 of 2013 was assented to on December 24, 2013 and commenced on January 10, 2014, numerous petitions in court have stalled implementation of the new law. For instance, intense lobbying and petitions saw the courts order suspension of sections 18, 19 and 21 of the new pension law to May 31, 2014.

At a time when NSSF is preparing to receive more funds from contributors, concerns have been expressed that huge amounts of cash is still held up in NSSF suspense accounts.

These monies end up here when employers remit to the Fund without member details or where employee records are misquoted, such as member number.

SUSPENSE ACCOUNTS

"Since 2012 when cash held in suspense accounts hit an all-time high of Sh7.2 billion, we have embarked on an exercise to seek for employer records and fish out those responsible. As at June this year, the amount of cash in suspense accounts has fallen to Sh2.4 billion," said Langat.

The NSSF management plans to have all cash held in suspense accounts resolved by June 2016. In the event that the matter is not resolved, all the remaining cash will be passed on to the Unclaimed Financial Assets Authority (UFAA), for further processing. NSSF is thought to be holding cash for workers of collapsed companies of yesteryears such as Overseas Trading Company (OTC) - whose members are yet to be identified.

"We have put in place strategies to identify those workers who were in such firms that have since shut down operations," said Langat.

While embroiled in numerous court battles, the Federation of Kenya  Employers has in the past accused NSSF board of colluding with Retirement Benefits Authority to frustrate employers seeking to opt out of tier two contributions.

Related Topics

NSSF collections