NAIROBI, Kenya
The National Social Security Fund (NSSF) has welcomed President Uhuru Kenyatta’s commitment to provide social protection for all Kenyans. The commitment outlined when President Uhuru Kenyatta addressed a joint sitting of the National Assembly and Senate will form an integral part of the Government’s legislative agenda. While confirming fund’s readiness to manage the commitments once the legislative approvals are secured, NSSF Managing Trustee, Tom Odongo noted that a key perspective of the President’s commitment will be a pledge to expand pensions coverage to cover all Kenyans as envisaged in the NSSF Bill 2012 set for parliamentary presentation and debate this year.
Speaking at Parliament buildings, President Uhuru Kenyatta while outlining his legislative agenda reiterated that his government will embark on a process to provide social protection for every Kenyan as outlined in the Constitution. By providing social protection to all Kenyan’s, the President noted that his government will be effectively investing in the country’s greatest capital resource. “We will champion the rights of all Kenyans, preserving and defending them not only through good governance and respect for the rule of law but also by extending the right to social protection,” President Uhuru Kenyatta said. And added: “We will expand the state pensions system so that all our citizens enjoy dignity in old age.”
In line with the president’s pledge, Odongo pointed out that the NSSF Bill 2012 seeks to transform NSSF to handle the Social Protection needs for all Kenyans and to enhance coverage and improve on the benefits currently offered to the fund members. Notwithstanding criticism from occupational schemes and Private pension service providers, Odongo assured that NSSF will seek to incorporate stakeholder views to enable the fund provide an optimum pension cover that meets the needs of all citizens. Failure to provide an expanded Social Security product under NSSF in coming years he said would be tantamount to discrimination for various sectors of the economy that are currently neither covered by NSSF nor by the private schemes.
Mr. Odongo appealed to the Occupational Schemes to look at the bigger picture of empowering Kenyans to take charge of their lives through enhanced savings. Mobilisation of domestic savings will go a long way in enhancing economic development by participating in key sectors of the economy that will also generate employment. “Whereas we appreciate the spirit of the criticism, we are also conscious of the fact that NSSF and the Private schemes cover less than 50% of formal sector employees which means that 80% of employable population is not covered by the NSSF mainly because they are in the informal sector, self-employed, exempted or unemployed.” Odongo explained.
The draft National Social Security Fund Bill, 2012 Bill, which was approved by the cabinet late last year, Odongo explained had been drawn to address the national social security plight and is not aimed at antagonizing existing occupational schemes that currently cover about 350,000 people excluding public service schemes. Established in 1965, NSSF currently operates as a provident fund providing lump sum benefits only with limited range of benefits. The NSSF Team Leader expressed regret that due to the current limiting structure, there has been a tendency for lump sum benefits to be poorly applied and squandered by the beneficiaries leading to growing poverty levels amongst senior citizens.
The draft bill is principally seeking to convert NSSF from a National Provident Fund into a Social Security (Pension) or (social insurance) Scheme. If successfully passed through the pending parliamentary process, the bill will facilitate the statutory repealing and replacement of existing National Social Security Fund Act (Cap. 258 of the Laws of Kenya). NSSF research justifying the need for NSSF’s transformation, Odongo explained had established that only 3.1% of elderly in Kenya above the age of 55 had reported receipt of any pension. Such grim statistics’, he pointed out confirm the growing need for NSSF to transform into a statutory national pension scheme to stem the growing incidences of poverty amongst the elderly which is currently much higher than the national average incidence of poverty.
While explaining that the draft bill had been drawn in full consideration of existing private/occupational schemes, Odongo disclosed that an opt-out model for schemes meeting specific reference tests had already been incorporated. When the bill comes to effect, NSSF will have to be competitive enough to retain its members by providing improved services and benefits. The bill envisions that the Retirements Benefits Authority (RBA) will regulate NSSF. RBA as a regulator will ensure that issues of governance, prudent investment and opt-out modalities are, sufficiently addressed.
NSSF, is currently on a reform path that has seen it rebranded and host stakeholder engagements including an Annual General Meeting last year to appraise it members on its corporate activities. “From this perspective, NSSF’s dark past should not be used to stall the on-going initiatives geared at encompassing a wider coverage in order to help the government provide social protection for all anchored on quality, customer focused service delivery,” Odongo concluded. The spirit of the new bill he stressed has also been previously mentioned in the National Development Plan 1997-2001 and the Economic Recovery Strategy for Wealth and Employment Creation 2003-2007 that explicitly provided to convert the NSSF into an autonomous pension fund with an increased coverage and range of benefits.
