EDITORIAL: Resolve KRA, NSSF row

What you need to know:

Most employers have automated the remittance of employee taxes and adding the pension funds to the bouquet is unlikely to raise their costs significantly if at all.
What needs to be agreed in black and white is that once KRA has collected the money, it will not divert it to Treasury as happened during the piloting of the system.
The danger with this, especially now that Treasury has demonstrated a big appetite for loans and revenue, is that the money may never eventually reach the final destination.

The proposal to have Kenya Revenue Authority (KRA) collect retirement contributions from employers on behalf of the National Social Security Fund (NSSF) is worth considering given that the pension fund spends way too much money in collecting the money itself.

Most employers have automated the remittance of employee taxes and adding the pension funds to the bouquet is unlikely to raise their costs significantly if at all.

What needs to be agreed in black and white is that once KRA has collected the money, it will not divert it to Treasury as happened during the piloting of the system. The danger with this, especially now that Treasury has demonstrated a big appetite for loans and revenue, is that the money may never eventually reach the final destination.

Of course, this means NSSF will have difficulties paying retirees and meeting its other obligations. To the extent that KRA will act as an agent, the idea is, therefore, worth exploring, but there should be a failsafe exit clause that will ensure that the contract is terminated at the earliest should either party fail to meet its part of the obligations.

If the system works as intended, it could significantly reduce the cost of collecting the money.

, which in turn should ideally translate to higher payments to retirees.

Of course, the irony of the government collecting retirement benefits for private sector workers while civil servants have no contributory scheme still awaits to be resolved.