Passage of NSSF Bill sets stage for pension scheme
If the NSSF Bill 2013 is passed into law, every worker will now part with six per cent of their monthly pay. FILE
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MPs made changes stamping new rates and curtailing powers of Labour secretary.
The transformation of the National Social Security Fund (NSSF) from a provident to a pension fund inched closer yesterday after MPs approved a Bill that now awaits presidential assent to become law.
Every worker will now part with six per cent of their monthly pay while employers will contribute a similar percentage to NSSF to cater for pension for workers.
The MPs made changes to the National Social Security Fund (amendment) Bill 2013, curtailing the immense powers granted to the Cabinet secretary responsible for labour issues Kambi Kazungu that would have seen him make regulations on the administration of the fund without consulting the board of managing trustees.
In the past, the Central Orgainsation of Trade Unions and the Federation of Kenya Employers had voiced objections to the government’s plan to take full control of appointing board members of NSSF and the National Health Insurance Fund (NHIF).
The enactment of the Bill will enable NSSF to execute its plans to raise members’ monthly contributions from a flat rate of Sh200 to a graduated scale.
Monthly contributions will now rise to Sh360 in the first year of implementation of the new Act should President Uhuru Kenyatta assent to it and increase to more than Sh10,000 in the fifth year for high-income earners.
The contributions were last reviewed in 2001 when they rose to Sh200 from Sh160 and NSSF has been lobbying various stakeholders, including MPs, to back the increments.
The fund is eyeing the higher contributions to help it offer greater social protection as it converts from a provident fund to a pension scheme.
The committee dropped its amendments that proposed to change the funeral grant from Sh10,000 to Sh40,000 saying it had received opinion that it would not be sustainable.
The lawmakers also introduced changes to secure the independence and security of tenure of the managing trustee.
“The managing trustee, unless prematurely terminated, serves for a term of three years and shall be eligible for reappointment for one further term of three years,” the amendments introduced by National Assembly Health committee chairman David Were states.
The committee raised punishment for those who make fraudulent claims in the pretext that they are legitimate beneficiaries from Sh50,000 to Sh300,000.
They also removed restrictions that required representatives of workers and employers organisations to be present before any meeting of the NSSF board can take place saying this will cripple the running of the organisation.
Mr Were initiated various amendments to the proposed legislation at the Committee of the Whole House stage. The MPs also made changes to the Bill as they scrutinised each clause with a toothcomb.
Corneli Serem, the Aldai MP, amended the Bill to remove the requirement that two people appointed by Cotu and two others appointed by FKE be present before a quorum of the NSSF board can be taken.
“The requirement creates an opportunity for rent seeking,” said Opiyo Wandai, the MP for Ugunja.
“It is not fair to give special treatment to some members of the board of trustees... All board members should be given equal treatment otherwise two institutions will hold the institution at ransom,” added Baringo North member William Cheptumo.
Nominated MP Abdinoor Mohamed pushed through amendments that will require the State to value the fund once every three years.
He also capped the amount payable for death and disability at two per cent leaving 10 per cent of the total contributions to pension payment.
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