Employment and Labour Relations Court, on Thursday, September 22, ended the National Social Security Fund (NSSF) monopoly in the country by declaring some of its requirements unconstitutional.
The court barred the social security fund from making mandatory deductions from workers' salaries, arguing that it had violated their labour rights.
While issuing the verdict, the court insisted that workers should have a right to pick a pension scheme without being obligated to contribute to the NSSF kitty.
NSSF deducts Ksh200 monthly from workers across the country, which it saves as part of their retirement benefits.
"Sections 20 of the NSSF Act No.45 of 2013 which makes it mandatory to register and contribute to the fund and oblige the petitioner's members (and other employees who have an adequate alternative pension or social security schemes) to join the pension or social security schemes operated by the 1st Respondent violates rights of employees and employers' free choice contrary to Article 49 of the Constitution and is hereby declared null and void," the court verdict read in part.
"An order of injunction is hereby issued prohibiting and restraining the respondents by themselves, their servants, agents, assigns or any person claiming through them or otherwise from demanding, compelling and or requiring mandatory registration, enrolment or listing of any employer or employee whether registered as a member of any retirement benefits scheme or not to register, enrol or list and contribute their earnings or any part thereof in terms of the NSSF Act No.45 of 2013," it added.
Further, the Employment and Labour Relations Court deduced that sections of the law that gave NSSF a monopoly in the market were unconstitutional.
The directive sought to give both workers and employees free will to register for the retirement saving scheme of their choice.
Following the ruling that trimmed its mandate, the social security fund maintained that it was established in line with labour laws and thus vowed to challenge the ruling at the Court of Appeal.
This comes just days after High Court judges Justices Mathews Nduma, Hellen Wasilwa, and Monica Mbaru quashed a new directive which sought to increase the monthly contributions to Ksh2,068.
The move was aimed at helping NSSF build a bigger retirement poll by increasing workers' monthly deductions tenfolds.
President William Ruto had hinted at reforming the sector to allow workers to increase their contribution.
Speaking during a parliamentary meeting with Kenya Kwanza leaders in Naivasha on Friday, September 16, Ruto indicated that the country's social security scheme was lagging.
"Today you will not believe that we are among the least pensions scheme on the continent. When you look at Tanzania, they have a better pensions scheme yet we have a better economy and likewise Uganda too," he stated.
"We have to rejig and see the way forward, the people from our professionals will be here tomorrow with those from NSSF to take us through what we have to do," he added.