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Proposed law to allow greater scrutiny of National Social Security Fund cash

NEWS
By - Macharia Kamau | August 29th 2013
By - Macharia Kamau | August 29th 2013
NEWS
Labour Cabinet Secretary Kazungu Kambi says under the NSSF Bill, the
pension fund could collect Sh6 billion a month from the current Sh600
million
. [PHOTO: FILE/STANDARD]

By Macharia Kamau

KENYA: The National Social Security Fund will in future hold annual general meetings as it transits from a provident fund to a pension scheme.

The move, which is a first for the fund, is expected to provide members of the institution a platform to question and hold to account NSSF’s management and board.

According to the revised NSSF Bill 2012 that will be tabled in Parliament when the house resumes its sittings, the social security provider shall convene yearly meetings attended by delegates representing all Kenyans who make NSSF contributions.

Annual meetings

This is in a bid to entrench good governance within the institution, with the delegates expected to hold the institution’s board of trustees to account for their actions.

NSSF has in the past been involved in irregular deals that have resulted in the fund losing billions of shillings that could have otherwise been used to improve pensioners’ lives.

“The board shall, at the fund’s expense, within six months of the end of the financial year of the fund, convene an annual general meeting of the members of the fund to be attended by delegates representing each of the categories of members,” reads the Bill in part.

“The annual general meeting shall be conducted in accordance with the provisions of the Retirement Benefits Act.”

The Bill also proposes a regular actuarial valuation of NSSF’s assets, which will be done every three years.

“The state of the fund shall be valued at intervals not exceeding three years by an actuary appointed by the board … the actuary shall carry out the valuation within six months of closure of the third financial year from the date the last actuarial valuation was done,” reads the proposed legislation.

“NSSF’s board shall also be required to formulate policies and guidelines to govern how the fund invests contributions from members.”

Review

Both NSSF and the Labour ministry have been lobbying for the review of the Act that is currently in place, arguing that the proposed law would significantly boost collections.

However, it has attracted some opposition, particularly because monthly member contributions will go up. Currently, members pay a standard Sh400 a month. The Bill, however, proposes a contribution of 12 per cent on members’ salaries, which would translate to Sh720 per month for minimum wage earners.

Labour Cabinet Secretary Kazungu Kambi said the fund currently collects Sh600 million a month, but this could increase to as much as Sh6 billion a month if the new measures are implemented.

Turning NSSF into a pension scheme is also expected to lead to a significant increase in member numbers.

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