6 June 2014

Kenya: Unions in Court to Block New NSSF Law

Nairobi — Two workers unions have moved to court to stop the National Social Security Fund (NSSF) Board of Trustees and Labour Cabinet Secretary from implementing the new NSSF Act 2013 on members or employees who have alterative pension or social security schemes.

The Kenya County Government and Kenya Quarry and Mine Workers Unions want the new law blocked on grounds that if effected, their employees or members will be compelled to abandon their current pension schemes in favour of NSSF.

They also argue that their members will be forced to join two parallel, overlapping and duplicative pension or social security schemes hence becoming a burden.

"The NSFF Act 2013 purports to suddenly and arbitrarily take away without any legitimate legal policy or constitutional justification of the applicants," they argued through their lawyer George Kithi.

According to the unions, the new Act will grant NSSF's Board of Trustees monopoly in the provision of pension and social security services in the country, contrary to public interest in having a competitive and fully liberalised pensions and social security schemes.

"The NSFF Act 2013 will kill or stifle other pension and social security schemes across the country and will jeopardize the livelihoods and social security of thousands of Kenyan citizens and retirees currently enjoying a pension or other form of social security," they stated.

The petitioners go on to say that under the said Act, all pensions and security services will be put under the care and management of NSSF's board of Trustees.

Under a certificate of urgency, the petitioners contend that the new Act is unconstitutional as it infringes on the applicants' members fundamental rights and freedoms because they will be obliged to register as NSSF members.

They further contend that sections 47 and 68 of NSSF Act 2013 are unconstitutional since they purport to give Labour CS wide and unlimited discretionary powers in the management of NSSF in total disregard of the principles set out in the Constitution.

"Pension and social security schemes established under NSSF Act 2013 are believed to be inferior to the petitioners' members' current pension and social schemes."

They say implementation of the NSSF Act 2013 will encourage employers throughout the country to close down current pension and social security schemes which oblige them to contribute more than six percent of employees' pensionable earnings.

Under the new Act, any person employed in Kenya and subject to the Employment Act must contribute to the new pension scheme.

The NSSF Bill 2013 was passed into law by the President on the December 27, 2013 and it was to be effected in January this year.

However, key provisions of the Act (section 20 and 21) were later suspended by the Cabinet Secretary of Labour until June this year.


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