NSSF defends Transformation Bill
15 November 2012, 14:33
Social security provider, National Social Security Fund (NSSF) has swiftly moved to set the record straight against criticism on the proposed Transformation Bill.
In a statement, Acting NSSF Managing Trustee Tom Odongo explained that the draft National Social Security Fund Bill 2012 had been drawn to address the national social security plight and is not aimed at antagonizing existing private schemes.
Social security, he said, is important for the well being of workers, their families and the entire community. “It is a means of creating social cohesion, thereby helping to ensure social peace and social inclusion. It is an indispensable part of the government social policy and important tool to alleviate poverty.
Having been established in 1965, NSSF operates as a provident fund providing lump sum benefits only with limited range of benefits. Due to the current structure, there has been a tendency for lump sum benefits to be poorly applied and squandered by the beneficiaries leading to growingpoverty levels amongst senior citizens.”
The on-going, stakeholder forums, Odongo said were also a platform to receive formal submissions from stakeholders and expressed regret that some stakeholders had resorted to media vendetta against NSSF without reading and understanding the proposals or offering alternative suggestions on how to strengthen the Bill to help Kenyans save and retire in dignity with a reasonable income replacement.
We have received good feedback from a number of stakeholders; we have since incorporated the same in the revised Bill. We will soon publish the revised Bill in the newspapers and Kenya Law monthly so that Kenyans can appreciate that we have addressed a number of their concerns as much as possible.
The draft bill is principally seeking to convert NSSF from a National Provident Fund into a Social Security (Pension) or (social insurance) Scheme. If successfully passed through the pending parliamentary process, the bill will facilitate the statutory repealing and replacement of existing National Social Security Fund Act (Cap. 258 of the Laws of Kenya).
NSSF research justifying the need for NSSF’s transformation, Odongo explained had established that only 3.1% of elderly in Kenya above the age of 55 had reported receipt of any pension. Such statistics’, he pointed out confirm the growing need for NSSF to transform into a statutory national pension scheme to stem the growing incidences of poverty amongst the elderly which is currently much higher than the national average incidence of poverty.
The draft bill has been informed by the growing needs by members diverse needs which are met in the proposal, and what opponents of the billthere is anything they would like added or removed to make the bill better they should do so in the open forums NSSF has been holding instead of “pouring cold water” on it.
While taking issue with criticism levelled by the new Transformationbill opponents, Odongo disclosed that, the bill seeks to expand social security coverage beyond the current capacity and it aims to benefit members from the time they join until their exit, and this what we mean in our slogan…”Growing you. For Good.”
Odongo added that unfortunately, the occupational schemes currently cover about 350,000 people only excluding public service schemes; a situation that is regrettable.
While explaining that thedraft bill had been drawn in full consideration of existing private schemes, Odongo disclosed that an opt out model for schemes meeting specific reference tests had already been incorporated. NSSF will fully be regulated by RBA who are charged with the responsibility of ensuring Pensions Schemes are well regulated and managed. RBA as a regulator will ensure that issues of governance, prudent investment and opt out options are addressed.
Odongo appealed to the Occupational Schemes to look at the bigger picture of empowering Kenyans to take charge of their lives through enhanced savings. He added that the pie is too big for all of us and we us NSSF commit to compete fairly in recruitment of members. Let us go out there and preach the message of savings so as to have as many members as possible join the schemes cause the need for saving for the future is ever-increasing.
Failure to provide an expanded Social Security product under NSSF incoming years he said would be tantamount to discrimination for various sectors of the economy that are currently neither covered by NSSF nor by the private schemes. Remember the new constitution advocates for Social Security cover for all, he added.
“Whereas we appreciate the spirit of the criticism, we are also conscious of the fact that NSSF and the Private schemes cover less than 50% of formal sector employees which means that 80% of employable population is not covered by the NSSF mainly because they are in the informal sector, self-employed, exempted or unemployed.” Odongo explained.
The spirit of the new bill he stressed has been previously mentioned in the National Development Plan 1997-2001 and the Economic Recovery Strategy for Wealth and Employment Creation 2003-2007 that explicitly provided to convert the NSSF into an autonomous pension fund with an increased coverage and range of benefits.
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