Government defers NSSF Act to May 2013

The government has deferred the implementation of the new National Social Security Fund (NSSF) Act which was set to be effective from January 10 to May 31, this year.

Labour Cabinet Secretary Kazungu Kambi said this was arrived at after a consultative meeting between the ministry and the Federation of Kenyan Employers (FKE).

Mr Kambi said the extended window period would give room for smooth and orderly transition from the operations of the previous act to the new Act.

“In the meantime contributions will be made as per the provisions of the old Act,” said the cabinet secretary who added that this will also allow the ministry to sensitise the mass on the new law.

“It is better we defer it so that we start as one family. We are looking at logistics because we have not educated the mass,” he said.

FKE Chief Executive Officer Jacqueline Mugo lauded the move saying employers had not budgeted for the increased rates and needed more time.

The Act which had been expected to be in force by January 10 requires all employees to remit 6 per cent of their salary to the fund while employers are expected to remit a similar amount.

“We see the window period provided as time for education and preparation by employers,” said the CEO.

Earlier, employers had called on the National Social Security Fund NSSF and the government to vary the commencement date for the implementation of the new social service scheme to allow for time to restructure their pay roll.

Speaking Tuesday at a Nairobi Hotel during a stakeholders meeting, the employers said that making the calculations for the new pension fund, feeding them into the system and implementing the deductions needs time.

The Chief Executive Officer CEO of Alexander Forbes the consulting firm for NSSF Mr. Sundeep Raichura said that the process is complex and requires a lot of time for the employees to adjust their payrolls, advice their employees and source for funds.

“Employers need time to understand the act, budget and communicate the same to employees and adjust payroll systems so which requires time,” said Mr. Raichura.

The commencement date for the new NSSF deductions was January 10, 2014 and the employers expressed concern that it is difficult for them since the date is in the middle of the month meaning half of the contributions will go to the old deduction while half will go to the increased figures which is hard to implement.

Under the increased deductions workers will be expected to pay six percent of their gross salary while the employer will pay an additional six percent making the total contribution 12 percent in favour of the employee.

Mr. Raichura called on Kenyans to embrace the new regulations saying that it is for the benefit of workers as they will receive their pension in form of monthly salaries once they retire.

“People should stop complaining that the deductions are high and look at our neighbors who deduct higher than us, for instance in Uganda it is 15 percent, Tanzania 20 percent and Senegal 33 percent,” insisted Mr. Raichura.

Speaking at the same event NSSF Acting Board Secretary Mr. Austin Ouko allayed any fears that the funds will be misappropriated saying the new NSSF act emphasizes on corporate governance and there are enough checks and balances.

Mr. Ouko said that the reason they are moving away from the former act is because it had a lot of structural loop holes but the current act is water tight and assured Kenyans of the safety of their contributions.

Responding to issues of capacity to cater for the increased numbers and funds, Mr. Ouko said that NSSF is currently upgrading its systems to be able to handle the increase which is estimated to get to 12 million people from the current two million.