Reprieve as govt delays new NSSF deductions
What you need to know:
- The move is to provide adequate time for employers and workers to be educated on the implications of the NSSF Act 2013 and for the concerned institutions to put in place the requisite structures to avoid pillage of pensioners’ money.
Workers got a reprieve on Tuesday after the government postponed the increase of National Social Security Fund rates.
The new rates will now take effect on May 31 and not at the end of this month as earlier announced. (VIDEO: New NSSF rates to take effect)
Labour Cabinet Secretary Kazungu Kambi said he reached a decision to postpone the deductions after a meeting with different stakeholders.
“Pursuant to consultative meeting held today (Tuesday) between the Ministry of Labour, Social Security and Services and the Board of Federation of Kenya Employers, the Cabinet Secretary for Labour Social Security and Services, acting vide powers empowered to him by the National Social Security Fund Act, 2013 and in a bid to ensure orderly and smooth transition, has deferred the date of the commencement of the Act from the 10th of January 2014 to the 31st of May 2014,” he said in a statement.
REVIEW PAYROLL
According to him, they are not ready to embark on the new deductions as they could face operational challenges.
The move, he said, will provide adequate time for employers and workers to be educated on the implications of the NSSF Act 2013 and for the concerned institutions to put in place the requisite structures to avoid pillage of pensioners’ money.
FKE boss Jacqueline Mugo said they had urged the Secretary to defer the implementation of the new law to allow employers to review their pay rolls in readiness for the higher rates.
“FKE however said that there was need for further engagement and discussions on the modalities including the payment structures and the rules and regulations required for smooth implementation,” she said in a statement.
TRIGGERED OUTCRY
Under the new arrangement, 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 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.
The new rates, which were first proposed last year, triggered an out cry from the Kenya National Union of Teachers (KNUT) and the Union of Civil Servants who declared that their members will not pay the increased deductions.
