The National Treasury Cabinet Secretary John Mbadi revealed on Monday, November 5, that the government is considering a revision on the current terms of the National Social Security Fund (NSSF) Act 2013.
In his address, Mbadi stated that this is all in a bid to alleviate challenges raised by employers in the private sector. The new changes are expected to level the playing field for employees and employers in both the private and public sectors.
“The government is committed to addressing these issues to safeguard the operations of all pension funds and give employees the most favourable pension benefits,” Mbadi stated.
“Let me also underscore the importance of positioning the pension sector to support the government’s bottom-up economic transformation agenda, otherwise known as the BETA agenda. Priority sectors which include investing in infrastructure and other high impact projects and programmes.”
Treasury CS John Mbadi signing for the loan facility, in Beijing on September 6, 2024.
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Treasury
Stakeholders from the private sector raised concerns about having to abandon providing private pension arrangements in order to comply with the NSSF plan.
“This was maybe not foreseen but now what is happening is that because the NSSF is mandatory and the other private schemes are not mandatory, the cost of funding both schemes for employers and employees is untenable.”
This development comes just a few months before the new NSSF contributions are set to be implemented next year in line with President William Ruto’s plan to enhance the country’s saving culture.
In February of this year, the Supreme Court lifted the orders of the Court of Appeal that allowed the government to increase mandatory pension contributions under the NSSF scheme.
In the initial ruling, Martha Koome stated that the Appellate Court erred in its decision by overturning a ruling issued by the Employment and Labour Relations Court (ELRC) on the basis that the court lacked jurisdiction to issue the judgment.
The ELRC had declared the NSSF Act 2013 unconstitutional on four grounds including; that it did not undergo public participation, and that the Act should have been tabled before the Senate before its enactment.
“In the circumstances, this case is to be remitted to the Court of Appeal to determine the substantive merits of the Judgment of the ELRC. Due to the nature of the matter, the surrounding public interest, and the time taken by the case in the corridors of justice, it is prudent that the matter be heard on a priority basis,” the CJ ruled.
As a result of the ruling, the NSSF Act 2013, which has dragged in the courts for almost a decade would continue. This new announcement by CS Mbadi could however be the reprieve that employers across the country could benefit from.
NSSF CEO David Koros speaking during a breakfast meeting held at the Sarova Panafric Hotel on August 15, 2023.
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NSSF
