State mulls to devolve, digitise retirement benefits payment

Geoffrey Kaituko.

Labour Principal Secretary Geoffrey Kaituko. 

Photo credit: Lucy wanjiru | Nation Media Group

The government is mulling to devolve payment of retirement benefits to retirees and digitise the process to reduce turnaround time.

The move will see retirees paid at the point where they make their claims instead of having to go to the national headquarters in Nairobi.

Labour Principal Secretary Geoffrey Kaituko said the National Social Security Fund (NSSF) needs to devolve payment of retirement benefits to beneficiaries in their localities.

He argued that this will reduce the claim handling time from the current 46 days to less than 30 days, and help the state-run pension scheme become more efficient.

“In this age and time, this is unacceptable. We can reduce that to within 30 days. Once the right documents are lodged by the claimant then this money should be paid at the place where the claim was filed,” said Mr Kaituko.

“If you filed your claim at the county headquarters, you should be able to be paid there instead of coming to Nairobi,” he added.

Runyenjes MP Eric Muchangi, who is also the National Assembly Labour committee chairperson, had expressed concerns over the struggle by employees to get their dues after they retire because of the sluggish process.

“What are you going to do to ensure that when people retire, accessing their pension becomes an easy process?” asked Mr Muchangi.

Mr Kaituko said it is possible to pay the claims away from Nairobi because NSSF has regional offices across the country, except for Mandera County.

In Uganda, they have managed to make significant reduction in the benefit processing turnaround time to 18 days and are targeting to reduce it to five days.

“What is happening currently is that NSSF is very centralised. You file your documents in Embu, for example, but they insist that you come to Nairobi for payments, meaning retirees spend a lot of money in the process,” he said.

Currently, retirees have to complete the relevant application form and submit the same (in person) to their nearest branch office.

Although the application forms are available online, at present, NSSF does not process benefit applications online.

The PS said it is even possible to digitise payments because many older citizens are now able to access payments through mobile or digital platforms.

“What is difficult for NSSF to make digital payment, which is a mode that is easy and accessible to the retirees?” he asked.

The NSSF’s monthly contributions stand at Sh400, including Sh200 from one’s employer. The fund on average pays out less than Sh250,000 when a member retires.

Kenya also suffers from a low pension coverage, with more than 70 per cent of workers retiring without a pension.

President William Ruto had proposed a six per cent increment in monthly contributions to the NSFF, up to Sh2,068.

However, the High Court in September stopped the bid to increase the contribution, ruling that the law supporting the increments was unconstitutional.

However, Mr Kaituko said the current model is not sustainable because what is being collected is eaten up either by administrative costs or is not sufficient to cover retirement benefits of retirees.

“This is why the proposal of six per cent increment both from the employee and employer is very key to us as a government and the workers. It will make retirees live a comfortable or decent life when they retire,” he said.

Welcome!

You're all set to enjoy unlimited Prime content.