Implementation of the new National Social Security Fund (NSSF) Act has seen the State pension scheme collect an additional Sh30 billion amid a push for major reforms.
A strategy document obtained by the Nation shows that the fund now collects approximately Sh4 billion every month from its registered members, translating to a projected Sh48 billion annually. Before the implementation of the enhanced contributions, the fund was collecting an average of Sh14 billion a year.
Employees in public service, including teachers, have joined the fund following the implementation of the new act, boosting the numbers and monthly contributions
The strategy document by the board indicates that the fund currently has a total of 2.9 million registered members with an investment portfolio of Sh320 billion.
In its three-year financial outlook, the fund projects to grow its portfolio to over Sh600 billion by 2026 and register more members from the working population of 18.3 million—according to Kenya National Bureau of Statistics (KNBS), there are a total of 3.1 million employees in the formal sector, 15.2 million in the informal sector.
The document also contains a raft of measures to improve governance of the fund. The fund has in the past been on the spot over bureaucratic processes, claims of misappropriation of funds and loss-making investments.
The fund seeks to build a bigger retirement pot and offer workers monthly payments after their retirement as opposed to the current one-off payment.
Under the new act, employees contribute 6 per cent with employers topping up with a similar percentage to place the monthly saving at 12 per cent. Top earners are currently deducted up to Sh1,080 up from the previous Sh200.
Labour Principal Secretary Geoffrey Kaituko told the Nation that the enhanced saving is for the benefit of employees.
“NSSF is an investment for your retirement. Instead of retiring into poverty with the Sh200 contribution, what if you retire with Sh5 million. We need to shift our mindsets,” said Mr Kaituko. Many pensioners were getting as little as Sh150,000 upon retirement based on the previous Sh200 contribution.
In the year ending June 30, 2023, a sum of Sh6.7 billion was paid out to a total of 42,691 pensioners. And in the month of July, a total of Sh1.9 billion was disbursed.
In other major reforms, according to the document, the period for processing claims has been reduced to 15 working days. Previously, pensioners would wait for 76 days.
The fund is also digitising its records with plans to automate its services to allow pensioners to access their savings within 24 hours, according to the fund’s long term plan.
Mr David Koros, the new Managing Trustee, who took over in June, said that his team was working to make the fund more efficient. “The ultimate goal of the transformation and enhanced contribution is to provide retired Kenyans with a decent pension,” he said.
He expressed his commitment to addressing the issues of misappropriation of contributions and fighting corruption.
“We have to restore trust and ensure proper utilisation of members’ contributions. We seek to promote a culture of transparency and accountability by implementing robust financial management systems and conducting regular audits,” Mr Koros said.
