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| NSSF board chairman Adan Mohamed and Treasury’s Financial Secretary Mutua Kilaka when they appeared before the Parliamentary Committee on Labour Thursday to explain alleged graft in implementation of the Tassia estate project. Mohamed said the NSSF board approved the project. [PHOTO: BONIFACE OKENDO/STANDARD] |
By Macharia Kamau
Kenya: The implementation of the new National Social Security Fund (NSSF) Act could be off to a rocky start after employers cited logistical hitches in meeting the January contribution deadline.
Employers said they are yet to adjust their payroll systems to factor in the new deductions, arguing that the period between gazettement and commencement of implementation of the Act was too short.
The law was gazetted on December 27 and its implementation started on January 10, with employers expected to remit January contribution using the new rates as per the Act.
Speaking at a seminar on the new law organised by Deloitte East Africa yesterday, a number of large companies noted that other than the short duration that they have had to embark on the implementation of the Act, there are other grey areas within the law that NSSF and the Labour ministry should clarify through supporting regulations.
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The new law, which raised the contribution rate to 6 per cent from a flat rate of Sh200 per employee, will be implemented in a phased approach over the next five years beginning this month.
“Employers may not have updated their systems, which may not be ready to deduct the new amounts. They are now realising that the pay for January is due this or next week,” said Nikhil Hira, a tax partner Deloitte.
NSSF officials, however, said the organisation had already embarked on implementing the law, adding that the institution was unlikely to deviate from the implementation path.
Richard Nyakundi, a communication official at NSSF, said employers with unique challenges with the law could iron them out with NSSF.
“There are those employers who could be having challenges that are unique to them… just as has been the case in the past. Such institutions can sit down with NSSF and see how best to go about the issue,” he said.
The new Act is expected to substantially grow the amount collected by NSSF to Sh15 billion every month over the next six years when it is implemented fully.
The fund has in the past collected about Sh600 million per month.
NSSF recently outsourced the contribution collection function to Kenya Revenue Authority.
Monthly collections have reportedly grown by 100 per cent to Sh1.2 billion.
