By James Anyanzwa
National Social Security Fund (NSSF) has defend the proposed Transformation Bill from criticism saying the Bill takes into account the existence of private schemes.
The National Social Security Fund Bill, 2012 seeks to position NSSF as a public mandatory social security scheme covering all employees in the formal and a voluntary scheme for the self-employed in the informal sector who wish to contribute.
In a statement yesterday, Acting Managing Trustee Tom Odongo said the Bill had been drawn to address the national social security plight and is not aimed at antagonising existing private schemes.
Private retirement benefit schemes, he said, have fears that the proposed changes to the NSSF functions will hurt other players in the industry.
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The Association of Retirement Benefits Schemes (ARBS) had threatened to oppose the proposals in the Bill, notably raising of contributions and the planned transformation of the public pension fund into a pension scheme, saying the move threatens their business.
But in a rejoinder, Odongo said failure to provide an expanded social security product would necessarily discriminate various sectors of the economy that are currently neither covered by NSSF nor by the private schemes.
Odongo said social security is important for the well being of workers, their families and the entire economy.
“Social security is an indispensable part of the Government’s social policy and an important tool to alleviate poverty,” he said, adding that the Bill, which seeks to expand social security coverage would benefit members from the time they join until they retire.
Opt out model
“Unfortunately, the occupational schemes currently cover about 350,000 people only excluding public service schemes, a situation that is regrettable,” he said.
He discounted the notion that the Bill will starve other schemes off business, saying an ‘opt out model’ for schemes meeting specific reference tests had been incorporated.
Under the new arrangement, NSSF would be regulated by the Retirement Benefits Authority — which would ensure issues of governance, prudent investment and ‘opt out’ options are addressed. “The pie is too big for all of us and we us NSSF commit to fairness in recruitment of members,” he said.
The association comprises about 100 of the biggest pension schemes that control more than 70 per cent of the country’s retirement savings pool. The entire sector is estimated at Sh450 billion.