The National Social Security Fund (NSSF) will challenge the High Court ruling that stopped its bid to increase monthly contributions from the current Sh200 to up Sh2,068.
President William Ruto said on Tuesday that he has agreed with the NSSF management and board to go back to the courts and push for increased compulsory monthly contributions towards retirement.
“I have had a conversation with the management and board of NSSF and we have agreed that we need to go and talk to the court again and ask them ‘Do we live in the same country?’,” said Dr Ruto in a forum at Nairobi Securities Exchange (NSE).
“I am hoping, working with Parliament and Judiciary, we can arrive at a compromise where we can increase our savings. We will be persuading Parliament and hopefully the court so that we do the right thing.”
The High Court, in quashing the NSSF Act of 2013, which was to allow for up to Sh2,068 monthly contributions to the Fund, said the Act was not subjected to public participation in breach of the Constitution.
The NSSF Act 2013 sought to raise monthly contributions by employees from the current Sh200 monthly and demanded employers match the payout.
Increased pension contributions were aimed at helping the NSSF build a bigger retirement pot and help workers have more money at retirement.
NSSF asset base stood at Sh284.49 billion as of June 2021 with the Fund having paid out Sh5.8 billion within this period.
The Fund received Sh14.7 billion as contributions from its 2.5 million members. Contributions were, in 2001, increased from Sh160 to Sh200.
But the NSSF has told the President that costs involved in collecting Sh200are rising and almost not sensible given the amount being collected has remained the same in over two decades.
“NSSF is telling me, progressively, it is becoming more expensive to provide the infrastructure to collect the Sh200. We may as well forget about it,” said the President.
The Fund in the financial year ended June 2021 spend Sh6.56 billion on expenses—equivalent to 44.6 percent of the Sh14.7 billion it received as members’ contributions.
Mr Omerikwa said if NSSF signs up at least two million of the over 15 million informal sector workers, the Fund can get more money and increase its investment on NSE from the current Sh65 billion to Sh180 billion.
“If we only get two million of these underserved Kenyans under NSSF contributing as little as Sh25 a day, and with the government incentive, the amount of money we contribute will increase three fold,” said Mr Omerikwa.
NSE has invested in 29 NSE firms including KCB and it has reached the internal investment limits on some of the counters.
NSSF at a glance
Sh284.49bn—NSSF Net Assets as at June 2021
Sh32.7bn—Interest on NSSF investment in 2020/2021 financial year
Sh200—Compulsory monthly contributions to NSSF per employee
10 per cent —Interest on members’ funds in 2020/2021 financial year
2.5 million— number of NSSF members by end of June 2021
Sh14.7bn— What NSSF received as members’ contributions in 2020/2021
Sh6.56bn— NSSF expenses in FY 2020/2021
Sh5.8bn— What NSSF paid out as benefits during 2020/2021 financial year
2001— When monthly contributions were increased to Sh200 from Sh160