As Kenya’s population ages, concerns over old-age poverty are becoming more pressing. To address this, the National Social Security Fund (NSSF) has proposed increasing contributions to the fund, with the aim of ensuring that more Kenyans have a secure retirement.
Currently, employees contribute 6% of their gross monthly income to the fund, while employers contribute an additional 6%. However, the proposed changes would see employees’ contributions increase to 10%, while employers would contribute 12%.
The proposal also seeks to raise the maximum amount of monthly contributions from Ksh 2,160 to Ksh 6,000 and to remove the current cap on pensionable earnings.
In a press release by the NSSF, employer, and employee contributions for tier one are KES 360 per month. Employer and employee contributions for tier two are KES 720 and KES 720 respectively.
“The total contributions for both employee and employer is KES 2160 per month,” read the press release in part.
The NSSF’s proposal has been welcomed by many experts, who believe that it will help to address the growing problem of old-age poverty in Kenya.
According to a 2020 report by the Kenya National Bureau of Statistics (KNBS), 63% of Kenyans over the age of 65 live below the poverty line, with many relying on their families for support.
The report also highlighted the fact that many Kenyans are not saving enough for their retirement, with only 23% of those in the formal sector contributing to a pension scheme. This has left many vulnerable to poverty in their old age, particularly given the high cost of living in Kenya.
In light of these challenges, many believe that the proposed changes to the NSSF are long overdue. By increasing contributions and removing the cap on pensionable earnings, the fund will be better able to provide adequate support to retirees.
Read: NSSF Not Sufficient To Offer Consistent Source Of Income Post Retirement – Cytonn Report
For many Kenyans, retirement is a time of uncertainty and anxiety. This is especially true for those who work in the informal sector, where access to social security is limited.
By increasing contributions to the NSSF, more Kenyans will be able to enjoy a secure retirement, with access to a steady stream of income to support them in their old age.
The proposed changes to the NSSF are also seen as a positive step towards reducing the burden on families who are currently supporting elderly relatives.
With more Kenyans able to access social security benefits, there will be less pressure on families to provide financial support to their aging loved ones.
However, not everyone is in favor of the proposed changes. Some have expressed concerns that increasing contributions will be a burden on both employees and employers, particularly given the economic challenges faced by many businesses in the post-COVID-19 pandemic era where many families and businesses are still trying to get up on their feet.
To address these concerns, the NSSF has stressed that the proposed changes will be implemented gradually, with contributions increasing by 1% per year over a period of five years.
This, it is hoped, will help to ease the financial burden on both employees and employers, while still ensuring that the fund is adequately funded. The NSSF has also highlighted the fact that the proposed changes will have significant benefits for the Kenyan economy as a whole.
By providing more Kenyans with access to social security benefits, the fund will help to reduce poverty and improve the overall well-being of the population. This, in turn, will lead to increased productivity and economic growth, benefiting businesses and individuals alike.
Nevertheless, simply increasing NSSF contributions is not enough to address the underlying challenges of old-age poverty.
Read: NSSF Acquires Additional Ksh700 Million Stake In KCB
The government must also implement policies aimed at increasing access to education, healthcare, and employment opportunities for Kenyans, particularly those in the informal sector. This will help to ensure that all Kenyans are able to build the skills and knowledge necessary to succeed in an increasingly complex and competitive economy.
In addition, the government must also work to address the gender disparities that contribute to old-age poverty in Kenya. Women are disproportionately affected by poverty in old age, due to a range of factors, including lower rates of employment and access to education.
Addressing these disparities will require a range of policies aimed at increasing access to education and employment opportunities for women, as well as addressing the cultural and social norms that perpetuate gender inequality.
The proposed changes to the NSSF represent an important step towards addressing the problem of old-age poverty in Kenya. By increasing contributions and removing the cap on pensionable earnings, the fund will be better able to provide adequate support to retirees, ensuring that more Kenyans can enjoy a secure retirement.
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