President William Ruto's plan to increase the National Social Security Fund (NSSF) member contributions ten-fold following the Court of Appeal ruling has faced a new hurdle.
This is after the Federation of Kenya Employers (FKE) on Tuesday, February 7, raised concerns with the Court of Appeal's ruling overturning an earlier decision by the Labour Court that had quashed the NSSF Act 2013 in September 2022.
According to FKE, Kenyan employers had argued that the NSSF Act 2013 needed to be resolved failure to which its implications would have significant ramifications on the Kenyan job market.
"Employers still hold the view that a pensions scheme is an employer-employee benefit and, therefore, the Employment and Labour Relations Court has the jurisdiction to determine the issues arising out of this employment issue," a statement from the federation read in part.
FKE particularly took issue with the decision of the Appellate Court that did not address the challenges they had raised regarding the NSSF Act 2013, especially touching on how the new deductions would be effected on basic pay or total emoluments.
Other issues the federation wanted to be addressed included the implications of the deductions on gratuity benefits and the commencement date of the deductions among others.
"There is currently no clear road map on the operationalisation of the Act. The country needs to be prepared for this transition and a clear implementation framework put in place," FKE asserted in their statement.
Furthermore, the federation argued that a 6 per cent deduction effected on an employee's pensionable earnings was a huge amount of statutory deduction if implemented on an employee's total earnings.
They highlighted their concerns over the Act's unclear guidelines with regard to whether the contributions will be deducted as a percentage of total earnings.
"Raising the pension contributions will be very expensive to both employers and employees and it will impact their take-home pay," FKE averred in their statement.
This is the first hurdle registered on the ruling of the Appellate Court that was expected to put into motion President Ruto's plan to increase NSSF contributions stating that the current Ksh200 being contributed was unsustainable.
As a result of their objections, FKE is calling for engagement between workers and employers and sufficient time for budgetary adjustments before the Act is implemented.
FKE warns that immediate implementation of the Act without sufficient consultation would destabilise the very beneficiaries it intended to assist and jeopardise private pension schemes.
