Shock for workers in new NSSF Bill

By ALPHONCE SHIUNDU

Kenya: Thousands of workers already grappling with the high cost of rent, food and other basic items may have to suffer more pain if President Uhuru Kenyatta signs a new Bill into law.

The National Social Security Fund (NSSF) Bill 2013 passed by Parliament yesterday will force all workers registered with the fund to pay it six per cent of their gross earnings every month.

This is equal to Sh6 per every Sh100 they earn, as opposed to the monthly flat contribution of Sh200 per worker they are currently paying.

For those workers already taxed through the Pay as You Earn (PAYE), their take home pay will shrink even more once the Bill becomes law.

The lowest paid teacher in Job Group H earning Sh16,200 will part with Sh900 to the NSSF, while the highest paid teacher in Job Group R earning Sh144,000 will remit Sh8,640.

An employee earning Sh100,000 will face Sh6000 in NSSF deductions.

Additionally, all employers will have to match their employees’ contribution to the fund by remitting another six per cent of the workers’ pensionable earnings to NSSF.

The Bill was passed by the National Assembly yesterday morning and now awaits assent by Uhuru.

The MPs also approved a fine of Sh300,000 for anyone who files fraudulent claims to the NSSF.  The new fine is five times the amount that had been proposed in the initial Bill, but MPs argued that the higher sum would deter those inclined to steal from Government.

After the fine, the culprit will also be required to repay the full amount or face three months in jail.MPs also made final changes in the Bill to grant the Managing Trustee of the Fund some form of job security.

They granted the Managing Trustee a three-year term with a possible re-appointment for a second term of three years.

This will come as relief to the chiefs of the Fund, who have been at the mercy of the cabinet secretary for Labour. The Chairman of the House Committee on Labour and Social Welfare, Mr David Were (Matungu) with the help of Abdinoor Mohammed, and Cornelly Serem (Aldai) helped in cleaning up the Bill ahead of the Third Reading.

Were pushed an amendment to make sure that four of the board members in the 11-member board come from employers and employees. Two will be from the Central Organisation of Trade Unions (Cotu), while the remaining two will come from the Federation of Kenya Employers (FKE).

Were said workers and employers must be allowed to nominate a man and a woman to sit on the NSSF Board to administer the Fund.

“This is meant to make sure that the employers and workers participate in the Fund. We really need to bring in workers and employers because they are the ones who contribute to the fund,” said Gladys Wanga (Homa Bay).

NSSF board meetings will only require two-thirds of the members to be valid after the House rejected a proposal by the committee that meetings must include representatives of workers and employers. MPs said this would allow Cotu and FKE to hold the board hostage.

Cotu Secretary General Francis Atwoli welcomed the Bill’s passage.

“It is long overdue. We support the Bill as Cotu has been fully behind it. We believe it is going to be a primary pillar pension scheme that every salaried Kenyan will be contributing to, including the President. The enhanced contributions will cushion workers against any harsh realities or retirement shocks,” he said.

He added: “The law transforms NSSF from a provident to a pension fund where a worker will be issued with two statements, one for provident and another one for pension. Besides a retired worker will earn monthly as opposed to being paid a lump sum that has been the case with the current NSSF Act.”

Additional reporting by Luke Anami and Alex Ndegwa