Consult more on NSSF

The Employment and Labour Relations Court recently voided the National Social Security Fund (NSSF) Act, 2013 and prohibited the proposed tenfold increase in mandatory deductions from monthly pay.

A three-judge bench comprising Justices Nduma Nderi, Monica Mbaru and Hellen Wasilwa declared the move to increase NSSF contributions from Sh200 to Sh2,000 unconstitutional because, inter alia, it did not benefit from public participation.

While it stands to reason that Sh200 in monthly savings is too little for comfort in retirement, there are good reasons to seek public input for a more robust social security policy.

First, as conceptualised, the new NSSF Act seems to be designed for salaried employees yet informal jobs account for the bulk of the country’s gross domestic product.

Instead of rushing to appeal the case, or seeking consensus in the top echelons of the three arms of government, there is a need for the drafters to seek people’s views on how best to actualise it.

First, the many self-employed Jua Kali artisans, whose incomes do not fit the monthly cycle, are best placed to suggest the amounts they can contribute, and how often.

Secondly, it is true that higher savings will lead to more investments, jobs and, ultimately, better incomes.

But incentives such as higher returns on savings and ensuring prudent management of workers’ funds would attract more savers than issuing edicts for everyone to come on board.

Thirdly, given the economic downturn, many households can barely survive, let alone find anything to save. It, thus, makes much more sense to encourage those who can to save more.

Lastly, there is a need to look at the matter from a broader perspective, given that there are quite a few well-managed pension schemes and funds that should be bolstered to complement the role of NSSF in the country’s economic growth.