COTU backs Ruto’s proposal on a 6% cut from workers’ salaries to NSSF
President William Ruto received an impetus in his quest for all Kenyan employees to have six percent of their gross salaries slashed and contributed to the National Social Security Fund (NSSF).
In a statement Tuesday, November 1, 2022, Centre for Trade Organisation (COTU-K) Secretary General said that the Ksh.200 flat contributions among workers needed an upward revision.
“We fully support the increment in NSSF deductions from the current Ksh.200 to the 6 per cent rate as captured in the NSSF Act,” said Atwoli.
Terming the current contribution the lowest in East Africa, Atwoli said an increase to a higher rate was long overdue.
This, according to the trade unionist, would cushioned millions of employed Kenyans against poverty at old age.
“For instance, a worker who has worked for 30 years being deducted Ksh.200 monthly can only take home Ksh.144,000 (subject to inflation) upon retirement. Such an amount ultimately leaves retirees exposed to old-age poverty,” said Atwoli.
“On the other hand, a worker earning Ksh.50,000 a month and having worked for 30 years being deducted 6 per cent with an equal top-up from the employer will take home Ksh.2.1 million (subject to inflation) upon retirement.
He said there is no active case against NSSF in courts after the organisation withdrew in October 2020.
COTU had filed the case in 2014 seeking orders to suspend the implementation of the NSSE Act of 2013.
Among major reasons cited included – workers under COTU-K not being represented at the NSSF Board and that the fund did not have a substantive Managing Trustee who would have seen the implementation of the Act.
“These two reasons, namely, the lack of proper governance structure, then, within NSSF, and the lack of workers’ representatives in the NSSF Board necessitated the case against NSSF. However, COTU (K) withdrew the case against NSSF in October 2020 after the two issues were resolved,” added Atwoli.
President Ruto had earlier slammed the current contributions which has had no meaningful impact, challenging stakeholders to make reviews for the greater benefit to pensioners.
He said the contributions meant no return on investment for millions of Kenyans with Ksh.200, which translates to a mere Ksh.72,000 in over 30 years of saving.
“There is no retired Kenyan today who is living on their NSSF retirement benefits. The meagre current contribution of Ksh.200 a month adds up to Ksh.72,000 in 30 years. There is no rate of return on earth that can grow this into adequate pension.
Both Atwoli and the President’s remark on NSSF, however, could be met with a looming legal battle.
This as the High Court on September 16, blocked the state from increasing mandatory NSSF deductions.
The state had proposed to have the contribution increased by a ten-fold to Ksh.2,068 but the court termed the move as unconstitutional.
“An order is issued prohibiting the government from compelling or requiring mandatory registration, enrolment or listing of any employer or employee whether registered as a member or any retirement benefits scheme or not ….to register, enrol or list and contribute their earnings or any party,” ruled Justices Mathews Nduma, Hellen Wasilwa and Monica Mbaru.
“Since the NSSF Act 2013 was not presented to the Senate for enactment as a money bill, the Act is declared unconstitutional, null and void.”
The top earners would pay half the charge at Ksh2,068, up from the current Ksh.200, while the low earners were to part with Ksh.360 or 12 percent of the minimum wage that had been set at Ksh.6,000 under a graduated scale meant to alleviate poverty among senior citizens.