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NEWS & CURRENT AFFAIRS

The Nairobian

Trustees now in dilemma over NSSF directive

Business

By Graham Kajilwa | Feb 23, 2024

Pension trustees are in a dilemma on how to go about the directive by the National Social Security Fund(NSSF) that insisted on the legality of the NSSF Act 2013 following a recent decision by the Supreme Court.

At a breakfast meeting on Friday organised by Enwealth Financial Services, whose business includes pension management, trustees expressed their concern over the directive by NSSF seeking an interpretation how to proceed.

The directive by NSSF stated that despite the decision by the Supreme Court to return the legal battle of enhanced NSSF contributions back to the Court of Appeal, employers need still to comply with the NSSF Act 2013.

“The Supreme Court has not lifted the Court of Appeal orders delivered on February 3, 2023. Consequently, the National Social Security Fund Act No. 45 of 2013 remains in force,” reads the notice from NSSF.

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It adds: “We affirm the Notice issued to employers on February 12, 2024 on remittance on NSSF contributions in line with the National Social Security Fund Act No. 45 of 2013.”

Association of Pension Trustees and Administrators of Kenya (Aptak) has however dismissed the directive from NSSF insisting that as it is, their members are not obligated by the NSSF Act 2013.

“The direct consequence of that (Supreme Court decision), is that the NSSF act 2013, as we speak today, is a non-existent law in our books,” said Aptak Secretary General Boniface Mwangangi.

He added: “Short of anything else that might have happened, that I do not know, you have no obligation to make contributions to NSSF if you have your scheme or even better benefits than those provided by NSSF.”

The Supreme Court decision found that the Employment and Labour Relations Court has jurisdiction to hear the case challenging the enhancement of NSSF deductions contrary to a previous Court of Appeal decision.

The Supreme Court, however, did not issue any orders to stop the contribution but found that the Court of Appeal had erred by declaring that the Employment and Labour Relations Court had no jurisdiction to hear the case.

The case was filed by the Kenya Tea Growers Association, Agricultural Employers Association and the County Pensioners Association.

This then puts pension trustees in dilemma on whether to comply with the directive from NSSF or the pronouncement of the Supreme Court that may lead to the case being heard afresh.

Already, as per the NSSF Act 2013, some employers had opted out of tier II to contribute into their schemes. The Act has two tiers I and II. Tier I contributions are mandatory to NSSF while II, employers can contract out.