Kenyans working abroad will be able to link up their retirement savings with the National Social Security Fund by 2017 and in so doing, have a safety net when they return home. The fund has already commenced talks with the Ministry of Foreign Affairs to implement a section of the NSSF Act, 2013 which is required to enable it collaborate with governments of any country where other similar fund schemes exist.
The Cabinet Secretary is required by section 64 (1) of the Act to make regulations giving effect to such arrangements. One of the issues that will be at the centre of the discussions is how to determine, where rights accrue both under the Kenyan law and that of the foreign country, which of those shall be available to the beneficiary.
They will also be looking at modalities of making any necessary financial adjustments into or out of the fund as well as how information of the members shall be shared between the two countries. The law also mandates the Cabinet Secretary to make regulations touching on the administration and enforcement of the remittances.
It is not immediately clear how many people the fund will be able to bring into its fold. Mr Richard Rori, NSSF’s Public Relations Officer, says it’s too early to tell. However, if the sizable diaspora population is anything to go by, the Fund stands to have a financial windfall. “With this Act we should hopefully avoid such cases where Kenyans go out there only to come back many years later worse off financially than they were when they left,” says Mr Rori.
This is one of the strategies that the national pensioner is pursuing to increase its pensionary base. At home it has been on an aggressive campaign to get every worker, including house helps registered to save for their retirement. The move was not popular at the time of introduction late last year, but according to the Fund the sizable number of low wage workers added to its members is a sign that it has borne fruit.
During a media workshop, NSSF chairman Adan Mohamed said the asset base for the fund had also increased considerably to stand at Sh152 billion as at June 2014 attributable to prudent investment in profitable sectors such as real estate. As a result he said the Fund had declared an interest of 12.5 per cent, the highest in more than a decade.
“Amidst all the negative publicity we have been receiving of late, good things have been happening and our members are reaping the benefits,” he says. He adds that the future was bright for the pensioner especially with the coming into effect of the NSSF Act, 2013 which increased the rates payable to it by both the employer and the employee, something that was initially fought heavily by both.
He said that fears raised by both parties, among them the management of the Fund, in opposing the increase had been effectively addressed by the new law. “The Act emphasises on the prudent management of NSSF expenses. Our current administration cost is 3.1 per cent of the asset base. I can assure you that in the next budget it will be at 2 per cent, otherwise the budget won’t be approved because it is a requirement of the law,” he says.
According to NSSF CEO Richard Langat, in the last two years Fund has managed to bring down the amount in the suspense account from a high of Sh7.2 billion in October 2012 to Sh2.4 billion in June this year. A suspense account is one where the contributions of members whose details are not clear are deposited. In the past, critics have raised concerns that corrupt officials may be dipping their hands into the account. The CEO however dismisses the concerns as unfounded saying that there are checks and balances in place to prevent such pilferage.