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Problems foreseen in new NSSF pensions scheme

25 February 2014, 15:39

Nairobi - Experts projected the new National Social Security Fund (NSSF) pension scheme to pose legal quagmires over some of the contentious issues it has in its provisions.

The new pension scheme, which was initially scheduled to come in force in January, was postponed until May 31.

It will take over from the current lump-sum benefit based provident fund.

KPMG Tax Manager, John Mgonda, called on lawyers to be ready to tackle the legal issues from contributors to the fund if they were rendered invalid due to an accident or injury before 36 months of contribution.

“As per the Act, no benefits will be paid if the contributor is rendered invalid due to injury/ accident before 36 months of contribution,” said Mgonda.

Another issue that is a potential legal quagmire is the survivors’ benefit, which cannot be paid out if the contributor died before he reaches his 36th-month of contribution.

Other potentially contentious issues in the Act according to Mgonda include the registration of employees who were on a daily wage.

Other challenges that will come with the enforcement of the Act in May 31st, according to Mgando will include the board’s act of determining their remuneration fees or allowances that they should be paid as opposed to having the Salaries and Remuneration Commission make the determination.

Caxton Kinuthia, another Tax Manager at KPMG, also questioned the Act’s requirement to register all employees and its applicability on a high turnover employee scenario.

– CAJ News

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