Introduction & Background
After the Court of Appeal in Civil Appeal No.656 of 2022 The National Social Security Fund Board of Trustees vs Kenya Tea Growers Association & 14 Others held that the National Social Security Fund Act, 2013 (the “Act”) is constitutional it is pertinent that both employers and employees get to understand what lies in store for them. Worthy to note, is that there is an appeal that has been lodged at the Supreme Court but there being no stay orders issued on the decision of the Court of Appeal, the Act is in force. Thus, below is a preview of some of the most important requirements to watch out for.
A Preview of The National Social Security Fund Act, 2013
1. Section 19 of the Act requires that all employers register with NSSF. Any employer who fails to register with the fund or fails to register their workers could be fined up to Kshs. 50,000.00.
2. Section 18 of the Act makes it mandatory for all employees between the ages of 18-60 years be registered as contributing members of the NSSF.
3. The Act at Section 20 requires that the monthly contribution to the fund at an equivalent of 12% of an employee’s monthly salary. 6% of the said contribution is to be paid by the employee directly while the other 6% is paid by the employer.
4. The new NSSF rates apply on a graduated scale. Employees whose salary is Kshs. 18,000/= or more will have to remit contributions of Kshs. 2,160 as the upper limit, this is the Tier II contribution. Employers are mandated to pay half the amount, i.e. Kshs. 1080. Whereas for employees who earn below Kshs. 18,000, the contributions are now pegged at Kshs. 1,440, with employers contributing Kshs. 720, this is the Tier I contribution.
Notably, NSSF invests its members’ savings in investments such as government securities, real estate and shared equities
Part V of the Act provides for the benefits available from the fund and they include: Retirement pension; Invalidity pension; Survivors’ benefit; Funeral grant; and Emigration benefit. While benefits payable from the Provident Fund include: age Benefit, survivor’s benefit, invalidity benefit, withdrawal benefit and emigration benefit. It is also important to note that an employee or his representative may make an application to the Cabinet Secretary, upon his employer becoming insolvent and his employment being terminated, to obtain pay from the National Social Security Fund. The amount payable is that which in the opinion of the cabinet secretary the employee is entitled to with respect of the debt owed to him. This amount shall not exceed Kshs. 10,000 or one half of the monthly remuneration whichever is greater in respect of any one month payable.
In the event that the Supreme Court upholds the decision of the Court of appeal employers are to maintain the new rates as prescribed by the NSSF Act 2013; perhaps a case of delayed gratification. Notably the fund stands to benefit even dependents of the members of the fund. Finally, it still remains needful for the public to be enlightened on the role and importance of the fund in order to foster membership.
By Nyaega Brendah
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