The need for people to plan, sacrifice, save and invest for a comfortable retirement where they can pursue new interests without passing any burden to their relatives and well wishers cannot be over emphasized. Since the establishment of the Retirement Benefits Authority (RBA) to regulate and supervise the formation and management of retirement benefit schemes, tremendous growth has been registered in the key industry. Even as the regulator strives to achieve its objectives, increasing the retirement benefits coverage among the working population (both in the formal and informal sectors) still remains a major challenge.
Against this background, the National Social Security Fund [NSSF]is set to increase the monthly contributions up to five times the current rate after the conclusion of the ongoing out of court talks between the National Treasury and workers’ unions ( under the Central Organization of Trade Unions ) and Federation of Kenya Employers ( FKE). The increment of the monthly deductions aims at helping NSSF build a big retirement pot that will give back funds to retired workers on a monthly basis as opposed to a one-off payment.
The monthly contributions were lastly reviewed in 2001 from Kshs. 160 to Kshs. 200. If the NSSF Act 2013 is implemented, employees will have to save more for retirement whereas employers will have to deal with increased compliance costs. Top earners will pay half the charge at Kshs. 1,080 up from the current rate of Kshs. 200, while the low earners will be deducted Kshs. 360 (or 12 percent of the minimum wage) on a monthly basis.
