Taxman set to collect NSSF remittances in pilot scheme

National Social Security Funds (NSSF) headquarters in Nairobi. The public pensioner spent Sh5.2 billion in 2011 of Sh6.8 billion collected from workers during the year. FILE  NATION

By GERALD ANDAE 

 

Kenya Revenue Authority (KRA) will from next month start collecting contributions made to the National Social Security Funds (NSSF) by workers and employers.

The pilot agency collections will run for six months and if successful, will set stage for departure of fund from receiving the contributions it has been collecting since it was established.

“We wish to inform all esteemed NSSF contributors, employers and the public that all contributions to NSSF will be collected by KRA on behalf of the NSSF starting October 1, 2013,” read part of a notice published Thursday.

Stakeholders have received the move with cautious optimism. The Federation of Kenya Employers (FKE) said it was too early to say how the KRA performance would rate compared to that of the pensions fund.

“Now it is too early to tell whether KRA will be an effective entity in collection of the contribution. We will have to wait and see at the end of the six month trial,” said FKE executive director Jacqueline Mugo said.

She said that employers had no problem with KRA collecting contributions but would monitor to see if there was an improvement in comparison to when NSSF was handling the contributions.

In June, Labour Cabinet Secretary Kazungu Kambi said that NSSF was collecting Sh600 million a month, projecting that this could increase to Sh3 billion.

Currently, KRA collects the standards levy on behalf of the Kenya Bureau of Standards and the road maintenance levy for the Kenya Roads Board.

Collection of contributions through KRA is a significant step towards reducing the fund’s operation costs which have been a drain on the NSSF’s returns to retirees.

The fund spent Sh5.2 billion in 2011 on administration — more than 50 per cent of assets — of the Sh6.8 billion collected during the year. In contrast private schemes spent about 0.2 per cent on operations.

A Bill seeking to convert NSSF from a provident to a pension scheme due for tabling in Parliament next week has proposed that workers pay at least 12 per cent of their gross salaries as contributions.

This would be an increase from the Sh200 that all workers now pay per month with those earning more than Sh100,000 per month being required to pay more than Sh10,000 monthly.