Changes to the National Social Security Fund (NSSF) law in 2013
sought to bump up mandatory remittances to the fund to 12 percent of
one’s pensionable earnings up from the current Sh400 monthly.
Seven years later, this proposal remains shelved following court orders. The NSSF stares at uncertainty regarding growth in the contributions received and adequacy of the reserve available for payment to beneficiaries.
A number of reforms are crucial for the future of the NSSF, starting with the strengthening of corporate governance. There have been grave concerns around corporate governance and the investments made by the fund in the past.
Second is the issue of widening the reach of the NSSF as a social protection pillar. With only 20 out of 100 working Kenyans enrolled in a pension scheme, there is a need to ensure that the reach of the primary social protection pillar is widened and made accessible particularly to those working in the informal economy.
This way, the weight of the dependency burden caused by aging Kenyans who have no social safety nets would be made lighter. Third, the quality of investments and portfolio diversification made by the fund is a matter of critical importance.
Even as investible opportunities appear diminished in the present environment given the rout in the equities and slowdown in the real estate asset classes, it is important that the fund generates strong investment income to meet the growing demands created by rising payouts.
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