Atwoli Defends Ksh2,160 NSSF Deductions, Says They're Not Tax

Central Organization of Trade Unions (COTU) Secretary General Francis Atwoli explained the benefits of the National Social Security Fund (NSSF) immediately implementing the NSSF Act No. 45 of 2013 which saw monthly deductions from salaries go up from Ksh200 to Ksh2,160.

In a statement on Friday, February 10, Atwoli noted that social security is a human right that focuses on addressing the universal need for protection against certain life risks and social needs.

He made reference to the International Labour Organization (ILO), under Convention No. 102 of 1952, which sets out the minimum standards for the provision of social security.

Equally, the Constitution of Kenya 2010, under Article 43 on Economic and Social Rights, provides that every Kenyan Citizen is entitled to a pension and social security.

"Consequently, the move to effective immediately implement the NSSF Act, 2013 is welcomed considering it makes it mandatory for employers to ensure that workers have a provident fund and a pension scheme.

"Heretofore, many workers have only been contributing to and receiving funds from the provident fund, which is a lump sum payment that workers have been receiving at a go, (Tier I). After receiving the lump sum from the provident fund, Kenyan workers have been left exposed to old age poverty with no social security covering them," he stated in part.

Atwoli added that moving forward, Kenyan workers will be contributing to and receiving funds from the pension fund under the NSSF which is a combination of both the provident fund (Tier I) and the pension fund (Tier II). Noteworthy, the NSSF Act provides that an employer may opt out of Tier II, as provided by the NSSF, for a better scheme.

This means that over and above the lump sum payment received at a go, upon retirement or as provided by the NSSF Act, 2013, Kenyan workers will be entitled to monthly benefits, upon retirement, as they would have respectively contributed under the Tier II.

"Finally, COTU (K) would like to remind Kenyan workers that the NSSF deduction is not a tax. These are funds that they will have access to upon retirement or as provided for by the NSSF Act, 2013.

"Further, COTU (K) is ready, willing, and available to have a high-level tripartite consultation, as provided for in ILO Convention 144, to discuss and resolve some of the teething problems that might be associated with the seamless implementation of the NSSF Act, 2013," Atwoli added.

He further called upon the NSSF Board of Trustees to appoint a very competent Managing Trustee/CEO who will live above corrupt persuasion.

With NSSF's new rates, employers and employees will be required to contribute Ksh2,160 jointly. Tier 1 will see both the employees and the employers pay Ksh360 while Tier 2 (pension fund) will see both the employee and employer pay Ksh720.

"The pension contribution will be 12 per cent of the pensionable wages made up of two equal portions of 6 per cent from the employee and 6 per cent from the employer subject to an upper limit of Ksh2,160 for employees earning above Ksh18,000," NSSF's statement read in part.

For Kenyans earning below 6,000, they will only pay contributions in the Tier 1 category.

Kenyans earning between Ksh3,001 and Ksh4,500 will have Ksh360 deducted monthly while those in the Ksh4,501 and Ksh6,000, bracket will have Ksh540 deducted monthly.

NSSF termed a ruling by the Court of Appeal which allowed the government to implement the new law that sees monthly contributions to the social fund increased by ten times, as a significant milestone and a big win for Kenyan workers as this will provide members with the opportunity to enhance their savings, secure their financial future and retire with dignity.

"The NSSF Board of Trustees Chairman Antony Munyiri would like to extend the Fund's sincerest gratitude to all stakeholders who have shown unwavering support throughout this process. Munyiri said the trust and confidence shown by stakeholders have been invaluable and the Fund is committed to providing the highest quality services and products to meet member retirement needs.

"He has also assured NSSF members that the Fund is fully committed to working with all stakeholders to ensure a smooth and seamless implementation of the NSSF Act No. 45, 2013," stated NSSF in part.

A woman working in an office. /CLASSIC 105