Role of Nssf in Welfare Development

Only available on StudyMode
  • Download(s) : 359
  • Published : March 22, 2013
Open Document
Text Preview
The National Social Security Fund (NSSF) was established in 1965 by an Act of Parliament under cap 258 Laws of Kenya. The Fund was intended to serve as the 1st pillar of social security for Kenyan workers. The ILO defines Security as the protection which society provides for its members through a series of public measures against the economic and social distress that otherwise would be caused by stoppage, or substantial reduction of earnings resulting from sickness, maternity, employment injury, unemployment, invalidity, old age and death the provision of medical care and the provision of subsidies for families with children. Social security is important for the well being of workers, their families and the entire community. It is a means of creating social cohesion, thereby helping to ensure social peace and social inclusion. It is an indispensable part of the government social policy and important tool to alleviate poverty. It can through national solidarity and fair burden sharing, contribute to human dignity, equity and social justice. It is also important for political inclusion, empowerment and the development of democracy.1 SOCIAL SECURITY STRUCTURE IN KENYA

Kenya has several types of schemes which offer social security which can be divided into three broad categories:- 1. Public Schemes
• The NSSF
• The NHIF
• The Civil Servants Pension Fund
• The local Authorities Pension Trust
• The Public Universities Superannuation Pension Fund
• The Workmen’s Compensation Fund
• The widows & Orphans Compensation Fund
• The Parliamentary Pensions Fund
These are established by Acts of Parliament.
2. Occupational Scheme
1 ILO resolution on social security, Geneva 2001 1
The Occupational schemes are run by employers for their employees and are underwritten by private insurance companies. 3. Individual Schemes
The individual schemes are private schemes designed for the employed, self-employed and/ or for those in non-personable employment. The public schemes, occupational and individual schemes cover workers mainly in the formal sector. They form the first pillar where membership is not optional but compulsory. The Occupational schemes form the second pillar where membership is either voluntary or mandatory and are privately managed. The voluntary schemes form the third pillar where membership is voluntary. REGULATION OF PENSION SCHEMES IN KENYA

The Retirement Benefits Authority (RBA) is the regulator and supervisor of pension schemes in Kenya. Currently, 1350 pension schemes are registered with RBA and cover 15% of the Kenyan Labour force. Labour Force Statistics

The total labour force is estimated at 8 million out of which 2.5 million are employed in the formal sector.2 NSSF has the largest share of the working labour force as illustrated in figure 2. Fig 2: Coverage Within the RBA 15% of Workforce67%22%11%0%1234 1- National Social security Fund

2- Civil service Pension Scheme
3- Occupational Retirements Benefit schemes
2 Central Bureau of statistics, 2007 2
4- Individual Retirements Benefits Scheme
Source: Retirements Benefits Authority, 2004
MEMBERSHIP OF NSSF
In 1966 membership of the Fund was 252,107. Over the years, membership has steadily grown and the Fund has a cumulative registered membership of 3,569,573. The Fund attributes this growth to an increase in the working urban population. The current active membership accounts are 887,421. NSSF currently draws its membership from workers in the formal sector of the economy. The Fund’s mandate is to register members, collect contributions, invest the contributions and pay specified benefits. The scheme is financed entirely by the employer/employee monthly contributions set at 5% of wages based on a ceiling of Kshs 4000 per month. Table 1: Membership and Contributions Received

Year
96/97
97/98
98/99
99/00
00/01
01/02
02/03
03/04
04/05
05/06
Members Registered
106,483
97,066
94,356
80,585
68,144
62,633
64,301
110,413
117,508
139,100...
tracking img