Treasury banks on NSSF contributions to fuel development
The government is banking on the proposed increase in National Social Security Fund (NSSF) contribution, saying it will help get money to spur development.
National Treasury Cabinet Secretary Njuguna Ndung’u termed the matter as urgent. He said it will, apart from helping Kenyans increase their savings also enable the government accelerate development using the monies contributed.
Accumulate savings
“The idea to increase NSSF savings out will accumulate savings and accelerate asset accumulation as soon as it is implemented. Once it is practically possible, it should urgently start,” he said on the sidelines of a Senate Finance and Budget Committee meeting in Mombasa.
However, employers, private pension schemes and some workers’ unions have raised reservations over the proposal to increase pension rates by six per cent.
The Federation of Kenya Employers said that while the move is noble, the modalities of implementation could be relooked at.
Speaking last year, FKE Chief executive Jackline Mugo said the proposal could lead to double payments, considering the existing private pension schemes.
Kenyans are expected to contribute at least Sh2,000 to NSSF from their salaries up from the normal Sh200.
In a ruling made by the Court of Appeal, members will now increase their contribution to six per cent of an employee’s earnings, with the employer matching the same. Appeal Court judges Hannah Okwengu, Mohamed Warsame and John Mativo ruled that the NSSF Act of 2013, which sought to increase monthly contributions from Sh200 to Sh2, 000 is legal.
In September 2022, the Labour and Employment Relations Court had declared the bid unconstitutional, null and void, saying the NSSF Act, 2013, was in breach of the Constitution as there was no public participation ahead of its enactment.
Finance and Budget Committee chair led by Wajir Senator Ali Roba said the committee is in the process of planning the 2023 calendar to inform budgets allocation.
