Kenyans have taken to the social media with mixed reactions regarding the the passing of a new NSSF Bill that is now awaiting the assent of President Uhuru Kenyata. Under the new bill, contributors to the government pension scheme will be required to make a contribution of 6% of their monthly income. Previously, employed contributors were required to contribute a standard 200 shillings into the NSSF pension scheme.
There are three main players in a government pension scheme; employees, employers and the government. As such, it is important to consider who stands to benefit more when thinking about the recent increment in NSSF contribution amounts.
These benefits should also be considered both on the long term and short term. If we take the long term look on them, there is no doubt that the employee stands to benefit more.
I for instance have been making a contribution of 200 shillings from my 20k salary with the same amount being chucked out by the employer. Under the new law, if at all it is passed, I will be contributing a good 1,200. The employer also contributes the same and this means that if my salary remains constant and I retire at the age of 55, I will have about 1M in savings… so why are Kenyans grappling about the new NSSF Bill.
5 Reasons Why You Should be Sh*t Scared About the New NSSF BILL
- We are Living in Hard Economic Times
You do not have to be a rocket scientist to know that the economy in Kenya is in shambles. Prices of commodities are skyrocketing, same goes for fuel and rent and everything else. Add this to the high lending rates being witnessed in the financial sector… the next thing that Kenyans want is a shrink in their monthly income.
- Kenyans are already burdened with taxes
I have always felt that Kenya is one of the countries in the world that has a very high rate of taxation. If you are employed, you are already paying PAYE, Value Added Tax, Excise Duty and more. Combined together, these taxes steal a large proportion of your monthly income earnings. It is unimaginable what chucking off another 6% from the pay package will do to our budgets.
- NSSF is One of The Most Corrupt State Firms in Kenya
NSSF has consistently made a grand entrance in the top 10 most corrupt parastatals in Kenya. Nepotism, misappropriation of public funds and illegal award of tenders all characterize the pension scheme firm. This gives Kenyans reason to be wary of them hence the apathy that has greeted the proposed NSS Bill.
- The Interest Rates Paid By NSSF are Laughable
The last time I checked, NSSF Kenya was not paying any interests that you would be proud of. I have schemed through the new NSSF bill and haven’t seen any clause that mentions a change in the interest rates earned. That means you contribute more, squeeze your budget but at the very same meager interest rates.
- Will We See More The Unemployment Rate Climb Higher?
The rate of unemployment in Kenya stands at 58%. Will we see it increase while we should be working to bring it down? There is little doubt that employers will shoulder the bigger burden when under the new NSSF Bill while expecting no benefits. If I was an employer, my strategy to counter losses would be to make more layoffs and stifle employment opportunities.
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All these make me wanna ask, what kind of Kenya at 50 are we building? Your comments will be highly appreciated.