NSSF deductions still need to be reviewed – Business Daily
The National Social Security Fund (NSSF) house on September 12, 2012. PHOTO | SALATON NJAU | NMG
The court ruling stopping a tenfold rise in monthly contributions to the National Social Security Fund (NSSF) should not mark the end of the debate on retirement savings.
The Sh200 per month fee is clearly not enough to sustain a comfortable retirement, taking into account the rise in cost of living over the years. Changing social dynamics also mean that retirees are increasingly being left to fend for themselves without the previous guarantee of assistance from family.
Many are also now opting to continue living in urban centres after retirement, unlike in the past when most people retreated to their rural homes after ending their working days. There is a cost implication to this, given the significant disparity between the cost of funding an urban lifestyle and a rural one.
The rural areas also have a better-defined social safety net compared to towns. It is also important to appreciate that a majority of Kenyans do not have the privilege of a private pension plan, and therefore the dependency ratio on NSSF remains high.
While the monthly contribution should not necessarily go as high as the Sh2,000 per month envisaged under the amended NSSF Act, it certainly needs to be adjusted significantly to sustain the fund and give retirees a decent lifestyle.
The country also needs to resolve the problem of low national savings, which leaves the economy and the public exposed whenever there are shocks such as the Covid pandemic. These savings can also be invested in infrastructure projects, sparing the taxpayer the need to borrow heavily to fund the development budget.