Central Organization of Trade Unions (COTU) Secretary General Francis Atwoli explained the new National Social Security Fund (NSSF) rates set to be implemented in February will be beneficial to Kenyans in the long run.
In a statement dated Saturday, February 10, the SG stated that the Ksh2,160 monthly deductions were not a tax but rather money that would cushion Kenyans upon retirement.
The COTU boss noted that all workers would benefit as it made it mandatory for employers to ensure that workers have a provident fund and a pension scheme.
He also added that workers will be entitled to monthly benefits upon retirement.
“Many workers have only been contributing to and receiving funds from the provident fund, which is a lump sum payment that workers have been receiving at a go (Tier 1 – provident fund).
“After receiving the lump sum from the provident fund, Kenyan workers have been left exposed to old age poverty with no social security covering them,” he explained.
However, he urged the fund management to efficiently manage the funds so that they cannot disadvantage Kenyans.
NSSF’s new rates require employers and employees to contribute Ksh2,160 jointly.
For Tier 1 – both the employees and the employers will pay Ksh360 while Tier 2 (pension fund) will see both the employee and employer part way with Ksh720.
“The pension contribution will be 12 per cent of the pensionable wages made up of two equal portions of 6 per cent from the employee and 6 per cent from the employer subject to an upper limit of Ksh2,160 for employees earning above Ksh18,000,” NSSF’s statement read in part.
However, Kenyans earning below 6,000 will pay contributions in the Tier 1 category only.
Kenyans earning between Ksh3,001 and Ksh4,500 will have Ksh360 deducted monthly while those in the Ksh4,501 and Ksh6,000, bracket will have Ksh540 deducted monthly.
Source: kENYANS.CO.KE