The NSSF Headquarters in Nairobi. PHOTO | ANTHONY KAMAU | NMG
The National Social Security Fund (NSFF) is planning to appeal a court decision that blocked its bid to increase its monthly contribution ten-fold up to Sh2,068.
The pension fund, which is the biggest local institutional investor in the stock market, told the Business Daily that it disagrees with the findings of the High Court that was delivered last week.
“We will be appealing the judgment early this week because we do not agree with it. Our legal team is actually writing the appeal and it can be filled even before then electronically,” a source at NSSF said.
The NSSF Act 2013 sought to raise monthly contributions by employees from the current Sh200 monthly and demanded employers match the payout.
The higher pension contributions were aimed at helping the NSSF build a bigger retirement pot and offer workers monthly stipends after retirement instead of the current one-off payment.
Kenya Tea Growers Association and Agricultural Employers’ Association moved to court to stop the process, arguing that the law supporting the increment was unconstitutional.
Justices Mathews Nduma, Hellen Wasilwa and Monica Mbaru in a ruling delivered last week quashed the NSSF Act of 2013.
They said the Act was not subjected to public participation in breach of the Constitution— which demands community input before major decisions are taken.
“An order is issued prohibiting the government from compelling or requiring mandatory registration, enrolment or listing of any employer or employee whether registered as a member or any retirement benefits scheme or not ….to register, enroll or list and contribute their earnings or any party,” the judges said last week
“Since the NSSF Act 2013 was not presented to the Senate for enactment as a money bill, the Act is declared unconstitutional, null and void.”
The contributions were last reviewed in 2001 when the rate was increased to Sh200 from Sh160.
In the quashed Act, total pension contribution for both the worker and employee was supposed to be a maximum of Sh4,136, being 12 percent of proposed maximum pensionable earnings of Sh34,476.
The judgment is a blow to President William Ruto’s social security plan, which includes increasing the NSSF monthly contributions.
The President has said the current rate is too low to build savings that would offer decent living upon retirement.
But the court decision has brought relief to employers who were expected to raise billions of shillings to match the workers’ contributions, a hit to firms that are yet to recover from the coronavirus-induced slump, which triggered job cuts, hiring freezes and business closures.
botieno@ke.nationmedia.com
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