The National Social Security Fund (NSSF) plans to begin the Ksh2,160 monthly deductions hit another snag after employers raised key issues that needed to be addressed before implementation.
Speaking to the media on Friday, February 24, the Federation of Kenya Employers (FKE) indicated that it had requested NSSF to pause the implementation of the monthly deductions.
President William Ruto had supported the move to increase the deductions explaining that it was aimed at creating a savings culture among Kenyans.
Among the issues that the employers want to be addressed include the pension amount the employees will earn and the option of the employees and employers to opt out of the Tier II contributions (pensionable fund).
NSSF's Ksh2,160 deductions are divided into two with both the employer and employee payig Ksh360 for Iier 1 ( provident fund) and Ksh720 for Tier II (pensionable fund).
“The employers need clarity on taxing pension benefits. Why save for the worker and then take 30 per cent away from them when he or she accesses her benefits?
"This defeats the purpose of saving for a pension," FKE executive director Jacqueline Mugo stated.
Consequently, the employers requested to have a discussion with NSSF before the new deductions are implemented. The team proposed July 1 as the new implementation date.
“We appeal to the government to embrace more dialogue in resolving NSSF issues. Let the parties engage in good faith and get an agreeable way forward that will move the country ahead on the establishment of the universal social protection system in Kenya,” FKF president Habil Obaka stated.
Additionally, the group called on the government to address the highest cost of living explaining that a number of Kenyans were struggling to make ends meet.
The employers also urged the government not to overtax the formal sector noting that the sector was grappling with the current state of the economy.
NSSF, on February 9, directed employers to effect the new deductions starting this month following the decision of the Court of Appeal green-lighting the implementation of the NSSF Act No 45 of 2013.
County Pensioners Association, on the other hand, challenged the new contributions at the Supreme Court on February 17.