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Notable Regulations Under the NSSF Act 2013

Following the determination of the Court of Appeal in Civil Appeal No. 656 of 2022 The National Social Security Fund Board of Trustees v Kenya Tea Growers Association & Another, renewed efforts has been stepped up in implementing the NSSF Act notably in respect to the following regulations which has prompted activity from other regulators including the Retirement Benefit Authority;

  1. The National Social Security Fund (Member Contributions) Regulations, 2014,
  2. The National Social Security Fund (Mandatory Registration) Regulations, 2014, and
  3. The National Social Security Fund (Contracting out by Employers) Regulations, 2014.

The Fund has developed various regulations for effective delivery of its mandate as per the parnt Act. They include inter alia;

The National Social Security Fund (Member Contributions) Regulations, 2014

  1. It reiterates under Part II, the mandatory contributions to the Fund. It further provides that an employer who opts to undertake the responsibility of making the mandatory contributions shall contribute twelve percent of the employee’s monthly pensionable earnings excluding fluctuating emoluments.
  2. Under the Regulations, where an employee is ordinarily employed by two or more employers in a month the employers of such an employee shall submit to the Managing Trustee an arrangement for the payment of contributions in respect of such employee. If no arrangement is made and submitted to or approved by the Managing Trustee, each employer shall be towards the employee as if he were the sole employer.
  3. In relation to the daily paid workers, the employer is mandated to deduct and remit contributions in accordance with the provisions of the NSSF Act, 2013.

The National Social Security Fund (Mandatory Registration) Regulations, 2014

  1. The regulations provide for the registration of the employers and employees to the Fund. Paragraph 5(2) of the Regulations provide that an employer who operates business in Kenya, on or after the commencement of these Regulations, shall register with the Fund and contribute as an employer in accordance with the provisions of these Regulations.
  2. Further, under paragraph 6, an employer eligible to be registered shall apply for registration not later than thirty days of becoming an employer by completing and forwarding to the Managing Trustee an application in the prescribed and approved form.
  3. An employee shall be responsible for the safety of his membership card and shall secure replacement from the Managing Trustee if the card is destroyed, lost or defaced
  4. An employer shall ensure that every employee in his employment who is eligible to register is registered not later than thirty days of the date of commencement of the employment.

 The National Social Security Fund (Contracting out by Employers) Regulations, 2014

  • The regulations apply to an employer who wishes to opt to pay Tier II contributions to a contracted-out scheme and a contracted-out scheme.
  • Any employer wishing to have such an arrangement, is mandated under the regulation to make application to the Retirements Benefits Authority for contracting-out to a scheme in relation to all employees in its employment or in relation to a particular description of employees.
  • Under Paragraph 5 of the Regulations, the employer who opts to contract out is mandated to notify the following:
  1. the employees in respect of whose employment the election is proposed to be made and those whom the employer is not electing.
  2. The trustees and administrator of the scheme to which the election is to relate; and
  3. All independent trade unions recognized in relation to the employees concerned of its intention to apply to contract out in the manner prescribed.
  • Notification under this regulation shall be in writing and shall specify the scheme and the categories or descriptions of the employees affected, date, and the benefits payable to the employees by the scheme
  • The application for the issue of a contracting-out certificate shall be submitted to the Authority at least sixty days prior to the intended date of contracting-out.
  • The Authority shall within thirty days from the date of receipt of an application for contracting-out from an employer, determine whether the employer has fulfilled the requirements for contracting-out, and in such case, it shall issue and send to the employer concerned a contracting-out certificate with a copy to the National Social Security Fund.
  • Where an employer fails to fulfil the requirements for contracting-out, the Authority shall within thirty days of receipt of the application, decline to issue the Contracting Out and give the applicant the reasons in writing.
  • A Contracting out Certificate issued in respect of a scheme shall be valid from the date of issue and shall remain in force until the scheme is deregistered, wound up or the contracting out certificate is cancelled in accordance with regulations, the scheme rules or the provisions of the written law under which the scheme is established.
  • The Authority has power to cancel the certificate should there be reasons to believe that such an employer has not shown to the Authority that it should continue.
  • The regulations under Part III of the Regulations, provide for the reference schemes and the requirements thereto.

What it means for the employers and employees

The move by the NSSF to fully implement the contribution as per the 3rd schedule of the NSSF Act No 45 of 2013 will have financial impact on both the employer and employee. The matching requirement when it comes to the mandatory contributions will impact on the employer’s business and increase in expenses. The same shall have corresponding effect on the side of the employee who will see a drastic decrease in the amount payable after all the deductions.

Businesses may be affected considering the increased contribution that employers will have to foot. This will have an impact on the number of employees that an employer may take considering the expenses. In essence, the country may be glaring at a looming retrenchment from various undertakings unless the government is able to reach an amicable solution with the employers.

Conversely, the move as fronted, is seen as one aiming to institutionalize the culture of saving and give the government avenue to get funds and also guarantee retired employees of access to better perks.

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