The Cabinet has approved a request by the Labour ministry to have theKenya Revenue Authority (KRA) collect members contributions on behalf of National Social Security Fund (NSSF).
The measure will boost collections by NSSF from the current Sh600 million to Sh2 billion per month.
The Cabinet also directed State Corporations and agencies that levy charges on their services to partner with KRA in the collection of levies.
“We hope to more than double NSSF collections by sealing loopholes that presently exist, where the payroll numbers at KRA do not match contributors list at the NSSF,” said Kazungu Kambi, Cabinet Secretary for Labour, Social Security and Services.
NSSF has been experiencing revenue leakages due to non-compliant employers, who deduct monies from their employees but fail to remit the same to the fund.
Available figures indicate that while more than 13 million workers are employed in the formal and informal sectors, only 1.5 million contribute to NSSF. “A team that comprises officials from both the KRA and NSSF are already working on modalities with a roll out of the new collection system to be ready by September this year,” said Kambi.
The new collection system will rely on the Pay as You Earn (PAYE) records held by the KRA to identify all employees and help track down their contributions.
The plan to streamline collection by NSSF comes at a time when a Bill to transform the fund from a provident fund to a pension scheme is in the pipeline.
Retirement dues
The NSSF Bill is ready and will soon be introduced in Parliament for debate. “We need to be able to cater for the elderly, unemployed, the youth and other vulnerable groups, something we cannot do under the current mandate,” said Kambi.
The draft National Social Security Pension Trust Bill, 2012, which seeks to convert NSSF from its current status to a social insurance scheme, will also facilitate repealing and replacement of the NSSF Act, Cap 258 of the laws of Kenya. The Sh110 billion fund is actively seeking to win the support of various stakeholders in its bid to transform.
The Transformation Bill seeks to position NSSF as a public, mandatory defined contribution scheme for employees in the formal sector and a voluntary, social security scheme for the self-employed. Available figures indicate low pension coverage with an estimated 350,000 people out of the two million engaged in the formal sector contributing to a pension scheme.
Once the Bill becomes law, it will be possible to provide unemployment benefits to those who lose their jobs while also providing maternity grants to pregnant women.
All contributors will be entitled to Sh10,000 for six months as unemployment benefit, a period during which one is expected to have secured another job.
By JACKSON OKOTH, The Standard
