The National Social Security Fund (NSSF) says it is in out-of-court talks with workers’ unions, aiming to unlock a dispute that could see retirement deductions rise to Sh1,080 from Sh200 and increase every year for the next five years.
The stalled 2013 Act that introduced the changes also sought to raise monthly contributions from employers to match each employee’s deductions.
NSSF Board of Trustees’ chairman Julius Karangi said the discussions with the Central Organisation of Trade Unions (Cotu) and the Federation of Kenya Employers (FKE) will see it raise the deductions “in the course of this year.”
“If that does not happen, the fund is going to shrink over time. We don’t want to find ourselves in a situation where we have to liquidate assets to pay retirees.”
This is amid a history of board wrangles and misappropriation of workers’ contributions at the State agency that was founded in 1965.
In the stalled Act, total pension contribution for both the worker and employee was supposed to be Sh2,160, being 12 percent of proposed maximum pensionable earnings of Sh18,000.
Both employees and employers were to remit six percent each. Minimum pensionable earnings was to be Sh6,000.
The upper limit was to be increased every year up to the fifth year when it was supposed to match national average earnings as published by Kenya National Bureau of Statistics.
Workers earning above Sh18,000 were to be divided into two levels of contributions called tier I and tier II. Tier I contributions were for those in respect of pensionable earnings up to the lower earnings limit of Sh6,000.
Tier II contributions means contributions in respect of pensionable earnings above the lower earnings limit.
Those in tier I were to contribute up to Sh720 per month while those in tier II were to add up to Sh1,440 being contributions pegged on earnings above Sh18,000.
Retirement Benefits Authority head of supervisory Charles Macharia said only an alternative dispute resolution mechanism can help unlock the stalemate that is now in its fifth year.
‘We are aware this matter is still in court, but we have to engage all concerned stakeholders to unlock it. Five years down the line is way too long yet the current level of contribution is not optimal,” said Mr Macharia.
The push comes at a time when the fund is yet to recruit a substantive CEO since 2016 when it advertised for the position. Many of the senior managers are also serving in an acting capacity.