The contribution of over 580,000 Kenyans from the informal sector to the National Social Security Fund (NSSF) stands at risk following the nullification of a law that brought them into the fund.
The NSSF board of Trustees says in an application to the Court of Appeal that the annulment of the 2013 Act by three judges last month threw out the legal foundation upon, which its operations are premised.
The NSSF Act 2013 sought to raise monthly contributions by employees tenfold from the current Sh200 monthly and demanded employers match the payout.
The law was successfully challenged as it was argued that the mandatory nature of registration and contributions to the fund, despite some employers having other pension schemes, was unfair. The court heard that the Act does not provide the option for an automatic opt-out but one has to register and later apply for an opt-out.
The NSSF, however, says the nullification of the law by Justices Mathews Nderi, Hellen Wasilwa and Monica Mbaru has plunged the pension sector into great turmoil.
“To cure the disruptive effect that the declaration of invalidity of the Act has on the applicant, its members and the entire pension sector, we request an order to stay the judgment pending the determination of the appeal,” NSSF board says.
The board of trustees says previously, the NSSF Act catered for persons in formal employment, and the 2013 Act was enacted as contemplated by Article 43(1)(e) of the Constitution, making it possible for persons in the informal sector to become members.
The NSSF board of trustees further says at present, there are more than 580,000 persons in the informal sector, who contribute to the fund.
Following the nullification, pensions for a large number of members in the informal are in limbo. The board also says various benefits such as emigration and burial benefits, which were created by the Act, will not be available to the members.
The board is pleading with the Court of Appeal to suspend the decision saying the deprivation will not be reversible.
