PHOTO | FILE Labour cabinet secretary Kazungu Kambi. Workers countrywide
will start paying increased rates to the National Social Security Fund
from end-month when the amended law governing the pension scheme comes
into effect.
Workers countrywide will start paying
increased rates to the National Social Security Fund from end-month when
the amended law governing the pension scheme comes into effect.
Labour Cabinet Secretary Kazungu Kambi picked January as the commencement date for the revised scheme.
Under
the new rules, employers and their workers will be expected to
contribute 1.2 per cent of the scheduled deductions each on their
pensionable earnings in the first year beginning end of this month.
On
Sunday, Mr Kambi told the Nation that the Kenya Revenue Authority had
been tasked to collect the contributions on behalf of NSSF to enhance
efficiency and transparency.
“Yes, we are starting the
implementation of the new Act this month,” he said. “We have appointed
the KRA to take charge of the contributions and for that we expect that
it will be easy for the employers to make submissions the same way they
do with Pay-As-You-Earn.”
Under the new regime, income
earners with total pensionable earnings above Sh18,000 monthly will
from the end of this month contribute Sh1,440 to the fund, while the
lowest income earners with pensionable earnings of up to 3,000 will pay a
total Sh180 in monthly individual contributions.
Employers
are expected to pay an equal amount to that contributed by their
workers to top up on their workers’ pension, bringing the total
deductions for individuals earning up to Sh3,000 to a monthly
contributions of Sh360 and those with pensionable income of up to 18,000
to a monthly contribution of Sh2,160.
Those earning less than Sh9,000 per month will be exempted from the new rules.
According
to the Act, both employers and their workers are expected to contribute
a total of 12 per cent of the total pensionable fund to the National
Social Security Fund with workers contributing six per cent while their
employers top up with a similar percentage.
“We expect
that workers will support this new scheme because it will remove money
from the pockets of their employers and save it for them for future
use,” he said.
Mr Kambi said massive investment plans
have been put in place and that interest from the investments would be
paid to the contributors.
But concerns have been raised
over the commencement date of January as most employers are yet to
communicate or prepare for the new rules.
But Mr Kambi said he would be meeting employers tomorrow to compare notes on the implementation.
In
the first year of implementation, workers and their employers will
contribute 1.2 per cent of the pensionable income, which will increase
to 2.4 per cent in the second year, 3.6 per cent in the third year, 4.8
per cent in the fourth year and six per cent from the fifth year
onwards.
“The employee contribution shall be drawn
directly from his salary and wages while employers’ contribution shall
come directly from the employer,” the NSSF board said in notice
circulated at the weekend and also published in the Daily Nation on
Monday.
Mr Sundeep Raichura, CEO of the Alexander
Forbes Group, the firm consulting for NSSF, said: “Employers and
employees who have pension schemes will have the right provided for
under the Act to opt out of second tier contributions as long as they
do so in writing and have created or are already members of a duly
registered pension scheme.”
Private pension schemes
that have been operating within their own arrangements are now expected
to reorganise themselves to operate within the new formula suggested by
the NSSF and deduct contributions within the limit provided for in the
Tier 2 deductions only.
No comments :
Post a Comment