NSSF contributions row goes to Supreme Court

A pensioners' lobby group, County Pensioners Association, has filed a petition of appeal at the Supreme Court challenging Court of Appeal’s decision that allowed the government's bid to increase monthly contributions to the National Social Security Fund (NSSF) ten-fold from Sh200 up to Sh2,068.

The group says the appellate court erred in its ruling that paved way for the implementation of the NSSF Act 2013.

The disputed ruling dated February 3, 2023 boosted President William Ruto's social security plan, which includes increasing the NSSF monthly contributions.

According to the group, the Court of Appeal misinterpreted and misapplied various provisions of the Constitution when allowing an appeal lodged by NSSF Board against the decision of the Employment and Labour Relations Court to quash the Act.

Pending the hearing and determination of the petition, the group wants the government stopped from enhancing the monthly NSSF contributions.

It wants the court to issue orders suspending the implementation of the decision by the Appellate Court and eventually declare that mandatory contributions to NSSF is unconstitutional.

Also Read: Higher NSSF rates kick off this month

In its filings, the group says implementation of the Act has ramifications and that it poses a serious threat of monopoly and emasculation of the entire pensions industry. They say there is a threat of mass transfers of employees from other 'superior' pension schemes to the NSSF.

"The ordered functioning of the pensions industry will suffer enormous and irreversible chaos, harm, and damage should the government, trade unions and Federation of Kenya Employers implement the disputed Act—as they have scheduled to do—before the full hearing and final determination of the Applicant’s appeal to this Court," says the group.

Further, it wants the Supreme Court to issue orders barring the NSSF Board of Trustees, the Retirement Benefits Authority and the Federation of Kenya Employees (FKE) from increasing workers’ monthly deductions which are set to kick off as of March 9, 2023.

"The public will suffer substantial and irreparable harm (including but not limited to a run on pension schemes superior to the NSSF) unless this court stops the implementation of the disputed Act pending the hearing and determination of the Applicant’s appeal," it argues.

 The County Pensioners Association argues that the orders they are seeking will not cause any harm, damage or prejudice to the government as allowing the state to implement the NSSF Act 2013 during the pendency of their appeal will aggravate the denial and miscarriage of justice "already occasioned" on them.

Also Read: Brace yourself for Sh2,000 NSSF pay cut

The disputed decision by appellate judges Hannah Okwengu, Mohamed Warsame and John Mativo approved the NSSF Act of 2013, saying that it was subjected to public participation as required by the Constitution.

The appellate court also found that the Employment and Labour Relations Court had no powers to determine the case and that the High Court should have handled the dispute.

The judges said that the Labour Relations Court can only hear matters where constitutional issues are raised in a context of an employer-employee dispute.

The judges further faulted the lower court’s bench, saying it erred by holding the Bill on the premise that it should have sought the concurrence of the Senate and the National Assembly before it was enacted.

But in the appeal filed at the Supreme Court, the pensioners' lobby says that the appellate court erred by holding that the Labour Court can only determine issues relating to the constitutionality of statutes and fundamental rights in employer-employee disputes.

"The Court of Appeal misapplied Article 41 of the Constitution by failing to appreciate that the practical effect of the impugned Act would be to encourage employers, as rational "homo economicus", to cut costs by transferring employees from superior pension schemes to the inferior pension scheme established by the impugned Act," it says.

It adds that the Court of Appeal erred by failing to appreciate that the Act conflicted with the Competition Act to the extent that its effect was to give the NSSF a monopoly, which would stifle and kill the pensions industry by favouring the NSSF over other pension providers.

The appeal is pending hearing directions and the government is yet to file its response.

Legal disputes on the government's plan to increase NSSF contributions started in 2014 at the High Court following four petitions by various parties including the Kenya Tea Growers Association and Agricultural Employers Association.

The second case was by Kenya County Government Workers Union while the third was filed by Kenya Quarry and Mine Workers Union.

The fourth case was by a group of 90 workers led by Edwin Nkauraki Lesidai.

The cases were filed in various parts of the country including Nakuru, Kisumu and Nairobi before the files were sent to Nairobi for consolidation because the issues raised were the same — the illegality of the NSSF Act 2013.