Employers fault penalties in the proposed NSSF Bill

By Jackson  Okoth

The Federation of Kenya Employers (FKE), a powerful lobby group representing the interests of employers, has sought for lesser penalties on those organisations that fail to remit payroll deductions of their employees to the National Social Security Fund (NSSF).

In the draft NSSF Bill 2012, the penalty to any person or employer who fails to remit payments due to the fund within the prescribed period shall be liable to a fine not exceeding Sh200,000 or imprisonment for a term not exceeding three years or both.

The fine for those employers who fail to remit employee deductions to the fund will also depend on the number of those they employ.

More consideration

“There is a feeling that this is too punitive to employers who provide a means of survival to thousands of people.  We are going to consider their proposal for amendments,” said Professor Arthur Eshiwani, one of the consulting drafters of the new NSSF Bill.

Employers have until October to present their views, the period after which the NSSF Bill will be presented to the Cabinet for approval and then tabled for discussion in parliament.

“We shall be circulating this draft Bill to all our members whose comments will be presented to consultants working on this document,” said Erastus Mwongera, the FKE Board Chairman.

He made these remarks yesterday at Nairobi’s Serena Hotel during a stakeholders’ engagement forum to provide a progress update on the on-going National Social Security Pension Trust Bill, 2012.

In attendance was Adan Mohamed, NSSF Board of Trustees Chairperson , Ms Jacqueline Mugo, FKE Executive Director and Tom Odongo, Acting Managing Trustee, NSSF.

The umbrella employers’ body has also questioned the legal status of the present NSSF, when it finally converts to the new pension trust fund.

Room for improvement

This matter was not adequately addressed at the forum, leaving room for the Government and MPs to decide, which form the pension fund will acquire when the Bill becomes law.

A plan to change the face and mandate of NSSF is happening when the fund is still dogged by legacy issues. In the past, powerful state operatives and their cronies have lined up their pockets using looted NSSF funds, matters that are yet to be resolved to date through a mountain of pending court cases.

“We have already appointed six fund managers and two custodians to keep track of the fund’s assets and investment plans. We have a service agreement with them to deliver a return of at least four per cent above overall inflation,” said Mohammed.

The new NSSF Bill has stringent provisions to safeguard against past abuses including a window for aggrieved employers or employees to seek for redress from a special tribunal to be set up and chaired by a reputable lawyer.