Labour Cabinet Secretary Kazungu Kambi postpones implementation of NSSF Act

Labour Cabinet Secretary Kazungu Kambi postpones implementation of NSSF Act
By Rawlings Otieno

Nairobi, Kenya: Labour Cabinet Secretary Kazungu Kambi has deferred the commencement of the new NSSF Act that came into effect on January 10 this year, to the end of May.

This has therefore given the employers and the employees a reprieve over the implementation of the new NSSF contribution that would have seen 1.2 per cent of the salaries being channelled to the fund.

Kambi said that the decision was arrived at after a consultative meeting with Federation of Kenya Employees to defer the enforcement of the new law, paving way for awareness and the employers to adjust accordingly.

This therefore means that the contributions to the fund will still be made as per the provisions of the old act that was repealed by parliament last year.

“In a bid to ensure smooth and orderly transition from the operations of the previous fund established under the repealed NSSF Act, I have deferred the date of the commencement of this Act to May 31,” said Kambi.

The CS made the remarks at his office in Nairobi Tuesday after a lengthy discussion with FKE Executive Director Jacquiline Mugo and other Board Members.

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The law is set to expand the fund’s collections by more than 1,000 per cent in the next five years and will make it easier for those who espouse looter’s ethos to pillage their way through the newly created wealth by weakening oversight.

Under the new regime, COTU and the FKE, which had permanent seats within the Fund’s board-and somehow strengthened oversight, will relinquish their positions. Appointment of the NSSF Managing Trustee will also escape scrutiny since the Labour Cabinet Secretary without the involvement of the board will make the appointment.

Two years ago, the Fund was collecting Sh600 million monthly from workers, but this grew to Sh1.2 billion after it outsourced the collection function to Kenya Revenue Authority (KRA).

NSSF projects the monthly collections would climb to a staggering Sh15 billion in the sixth year of the implementation of the new Act. This would amount to Sh180 billion annually in member contributions, far much more than any listed firm on the Nairobi Securities Exchange makes in annual earnings.

The contribution scheme of the new Pension Fund will be at 12 percent of pensionable earnings (basic earnings) split at a 50:50 ratio, between the employee and employer, with each paying six percent.

A worker earning Sh13,000 minimum government wage would pay the lower bracket amount, while the higher cap would cushion workers earning over Sh300,000 from paying more.

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 of the age of 50 years.

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Kazungu Kambi NSSF Act