The National Social Security Fund (NSSF) has nearly tripled its monthly collections with the enforcement of the new law that has enhanced contributions by workers and employers.
A strategy document obtained by Business Daily shows the fund now collects approximately Sh4 billion every month from its registered members, up from the Sh1.3 billion previously.
This translates to a projected Sh48 billion annually, meaning the new NSSF Act is set to unlock an additional Sh30 billion to the social security fund.
Under the new Act, an employee contributes 6.0 percent of his or her monthly salary, which is matched by the employer.
Top earners are currently deducted up to Sh1,080, up from the previous Sh200. Before the implementation of the enhanced contributions, the fund was collecting an average of Sh14 billion every year.
"With the implementation of the enhanced contribution system, we anticipate a significant increase in monthly contributions. We expect monthly contributions to reach Sh4 billion, which marks a substantial 207 percent increase compared to the previous monthly collections of Sh1.3 billion,” NSSF Managing Trustee David Koros said.
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.
The investment portfolio includes tenant purchase scheme loans (TPS)quoted Equities, quoted equities, corporate bonds, government securities (T-bonds and T-bills), and fixed deposits.
Employees in public service, including teachers, have joined the fund following the implementation of the new Act, boosting the numbers and monthly contributions.
The fund projects to grow its portfolio to over Sh600 billion by 2026. It seeks to tap more members from a pool of 18.3 million working population.
According to the 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 and another 352,000 in the public sector.
The document also contains a raft of measures designed to improve governance of the fund that to ensure a comfortable retirement and prudent management of pensioners’ savings.
The fund has in the past been on the spot over bureaucratic processes and claims of misappropriation of funds, coupled with loss-making investments.
The Fund seeks to build a bigger retirement pot and offer workers monthly stipends after their retirement as opposed to the current one-off payment.
Labour Principal Secretary Geoffrey Kaituko says the enhanced contributions will benefit employees, who instead of retiring into poverty will have some substantial amount to take care of themselves in retirement.
“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 Labour PS Geoffrey Kaituko.
A majority of pensioners were getting as little as Sh150,000 upon retirement based on the previous Sh200 contribution.
