Former President Kibaki (right) and Uganda President Yoweri Museveni at a past
function.[PHOTO: FILE/STANDARD]
Kenya has proposed to undertake far reaching
reforms of its national pension system that will result in increasing
the amount of pension paid to retirees.
While also increasing contributions by employer and employees as well as allowing self employed Kenyans to join the national pension scheme.
Failure to include informal employed persons and the inadequacy of the pension paid to retiring formal workers has led to inadequate pension payment or non repayment at all for those self employed upon retirement, a factor that has been attributed to the high poverty rate among the elderly in Kenya of 63 per cent compared to national average of 47, according to the Retirement Benefits Authority (RBA).
The current national pension system is a provident fund known as the National Social Security Fund (NSSF) whose main objective is to provide to provide basic financial security benefits to Kenyan workers when they reached the end of their working lives.
But now the proposed National Social Security Fund Bill 2012 seeks to position NSSF as a public mandatory social security scheme covering all employees in the formal sector and a voluntary scheme for the self employed and workers in the informal sector who wish to make voluntary contributions to the fund.
“The Bill seeks to convert the current NSSF from a Provident Fund to a Pension Scheme while strengthening the corporate governance of the NSSF,” noted a statement on the proposed scheme released on Tuesday by the government.
The new pension model will increase coverage of the NSSF, improve the adequacy of benefits provided by the NSSF, provide benefits in the form of a regular pension income and provide for the option to partially opt out of making contributions to the new NSSF for employers who wish to contract-out of the NSSF to a scheme that meets a reference scheme test.
The conversion of the NSSF from a provident fund to a pension scheme is consistent with government development blue print of Vision 2030 and is in line with the new Constitution of Kenya which gives every Kenyan a right to social security. The new NSSF will be subject to the regulatory oversight of the Retirement Benefits Authority and will comply with the provisions of the Retirement Benefits Act.
The current provident fund is not required to adhere to pension regulatory requirements.
While the current rates of contribution to the NSSF are subject to a maximum monetary ceiling of 4.7 U.S. dollars per month translating to a contribution of less than 1.2 per cent of national average earnings, the rates of contribution to the new pension fund will be at 12 per cent of basic earnings with employee and the employer contributing half of the amount.
While also increasing contributions by employer and employees as well as allowing self employed Kenyans to join the national pension scheme.
Failure to include informal employed persons and the inadequacy of the pension paid to retiring formal workers has led to inadequate pension payment or non repayment at all for those self employed upon retirement, a factor that has been attributed to the high poverty rate among the elderly in Kenya of 63 per cent compared to national average of 47, according to the Retirement Benefits Authority (RBA).
The current national pension system is a provident fund known as the National Social Security Fund (NSSF) whose main objective is to provide to provide basic financial security benefits to Kenyan workers when they reached the end of their working lives.
But now the proposed National Social Security Fund Bill 2012 seeks to position NSSF as a public mandatory social security scheme covering all employees in the formal sector and a voluntary scheme for the self employed and workers in the informal sector who wish to make voluntary contributions to the fund.
“The Bill seeks to convert the current NSSF from a Provident Fund to a Pension Scheme while strengthening the corporate governance of the NSSF,” noted a statement on the proposed scheme released on Tuesday by the government.
The new pension model will increase coverage of the NSSF, improve the adequacy of benefits provided by the NSSF, provide benefits in the form of a regular pension income and provide for the option to partially opt out of making contributions to the new NSSF for employers who wish to contract-out of the NSSF to a scheme that meets a reference scheme test.
The conversion of the NSSF from a provident fund to a pension scheme is consistent with government development blue print of Vision 2030 and is in line with the new Constitution of Kenya which gives every Kenyan a right to social security. The new NSSF will be subject to the regulatory oversight of the Retirement Benefits Authority and will comply with the provisions of the Retirement Benefits Act.
The current provident fund is not required to adhere to pension regulatory requirements.
While the current rates of contribution to the NSSF are subject to a maximum monetary ceiling of 4.7 U.S. dollars per month translating to a contribution of less than 1.2 per cent of national average earnings, the rates of contribution to the new pension fund will be at 12 per cent of basic earnings with employee and the employer contributing half of the amount.
Xinhua
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