Role of Nssf in Welfare Development

The national brotherly Security pullment company (NSSF) was established in 1965 by an Act of parliament under cap 258 Laws of Kenya. The investment firm was int finish to serve as the foremost pillar of hearty security for Kenyan workers. The ILO defines Security as the fortress which society provides for its members through a series of public measures against the economic and affable distress that otherwise would be rushd by stopp ripen, or substantial drop-off of earnings resulting from sickness, maternity, employment injury, unemployment, invalidity, old fester and death the provision of medical c ar and the provision of subsidies for families with children.Social security is all important(predicate) for the well being of workers, their families and the unblemished 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 indemnity and important tool to al leviate poverty. It rear end through national solidarity and pretty burden sharing, contri ande to human dignity, equity and social justice. It is excessively important for political inclusion, empowerment and the development of democracy. 1 SOCIAL SECURITY organise IN KENYAKenya has some(prenominal) types of schemes which offer social security which can be divided into three broad categories- 1. Public escapes The NSSF The NHIF The Civil Servants grant investment company The local Authorities indemnity Trust The Public Universities Superannuation Pension breed The Workmens Compensation stock certificate 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 two hundred1 1 The Occupational schemes are run by employers for their employees and are underwritten by private insurance companies. . soulfulness Schemes The individual schemes ar e private schemes designed for the employ, self-employed and/ or for those in non-personable employment. The public schemes, occupational and individual schemes hover workers mainly in the noble sector. They form the first pillar where social status is non optional but compulsory. The Occupational schemes form the second pillar where membership is either self-imposed or mandatory and are privately managed. The voluntary schemes form the ternary pillar where membership is voluntary. REGULATION OF PENSION SCHEMES IN KENYAThe Retirement proceedss function (RBA) is the regulator and supervisor of indemnity schemes in Kenya. Currently, 1350 pension schemes are registered with RBA and cover 15% of the Kenyan Labour force. Labour Force Statistics The total outwear force is estimated at 8 gazillion out of which 2. 5 million are employed in the prescribed sector. 2 NSSF has the largest share of the running(a) labour force as illustrated in figure 2. Fig 2 Coverage Within the RB A 15% of Workforce67%22%11%0%1234 1- topic Social security Fund 2- Civil service Pension Scheme Occupational Retirements Benefit schemes 2 Central Bureau of statistics, 2007 2 4- various(prenominal) Retirements Benefits Scheme Source Retirements Benefits Authority, 2004 MEMBERSHIP OF NSSF In 1966 membership of the Fund was 252,107. all over the years, membership has steadily grown and the Fund has a cumulative registered membership of 3,569,573. The Fund attributes this festering to an increase in the working urban population. The catamenia active membership accounts are 887,421. NSSF currently draws its membership from workers in the formal sector of the economy.The Funds mandate is to register members, collect contributions, invest the contributions and pay specified benefits. The scheme is financed entirely by the employer/employee periodical contributions redress at 5% of struggle based on a pileus of Kshs 4000 per month. Table 1 Membership and Contributions Received family 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 Contributions (Kshs billions) 1. 538 1. 589 1. 539 1. 593 1. 650 1. 688 2. 562 3. 602 3. 847 4. 00 TYPES OF CONTRIBUTIONS PAYABLE TO NSSF there are three types of contributions payable to the Fund namely- Standard contributions in respect of regular workers at kshs. 200 (employer) and Kshs. 200 (employee) Special contributions in respect of casual workers at 5% of the employers total wages bill Voluntary contributions payable in respect of self employed persons. Voluntary contributions range from a minimum of Kshs. 100 to a utmost of Kshs. 1000 The financial resource of NSSF is totally dependent on its members and not government funded.The types of contributions payable to NSSF have varied over time as follows- 3 Table 2 Monetary ceiling on contributions Year Total (Kshs) Employers contribution (Kshs) Employees contribu tion (Kshs) 1966-1977 80 40 40 1977-2001 160 80 80 2001 400 200 200 There are different types of benefits paying by NSSF to its members. The Age Benefit or Retirement benefit is paid to a member who is 55 years and is no longer in employment. Payment is a iodine lump sum do up of total contributions and provoke clear over the contribution period. Minimum interest according to law is 2. % per annum. The age benefit is paid to a member who has attained age 55 and has retired from regular employment. The withdrawal benefit is paid to a member who is at least 50 years and is unemployed. The invalidity benefit is paid to a member who is certified as being permanently incapable of working and there is no age barrier prescribed. The emigration grant is paid to a member who is permanently leaving the country and no age barrier is prescribed. The survivors benefit is paid to worthy dependants of a deceased member. The funeral grant which amounts to kshs. ,500 is paid to the family of th e deceased member to help defray funeral expenses. In summary form the original mandate of the NSSF has been registration of eligible members, collection of monthly contributions, investment of the contributions mainly in government activity Securities and hire of the contributions when due. Table 3 Contributions & Benefits paid since 1997 Financial statistics in billions of Kshs Year ended 30th June 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Contributions 1. 59 1. 54 1. 59 1. 65 1. 68 2. 50 3. 60 3. 85 4. 29 4. 6 Benefits paid 1. 53 1. 62 1. 79 1. 87 2. 21 2. 20 2. 09 2. 23 2. 3 2. 85THE aim OF NSSF IN THE WELFARE AND DEVELOPMENT OF THE KENYAN SOCIETY The Fund plays the routine of securing the future of its members. After several years of contribution members are certain of a lump sum payment that goes towards alleviating 4 poverty. Studies have shown that the payments by NSSF have assisted members in different ways. The Fund is an active participant at the capital of Kenya convey Exchange (NSE). Quantitatively the Funds portfolio at the Stock Exchange is equivalent to 81o of the NSE value. In this regard the Fund helps to calm the operations of the NSE. The Fund has shareholdings in companies such as Bamburi Cement (1710).E. A Portland Cement (2710), KPLC (710), Kenya Commercial Bank (910), Kenya Breweries (60/0), British America Tobacco (160/0), National Bank of Kenya (480/0) among others. Should the Fund decide to dispose off its equity, this would drastically come to the stock exchange. The Fund has also developed several estates in Nairobi and Eldoret. The purchasers pay 100/0 deposit and are allowed to reside in the residential houses while paying the balance in monthly instalments for a period of 15 years. This enables Kenyans to own homes at a more cheap rate through a Tenant Purchase Scheme that is friendly. The interest rate is fixed.This goes on to assist the Governments goal of providing affordable housing to Kenyans. Besides, NSS F has several commercial buildings and plots around the country. The rents charged are fair and this stabilizes the costs of office staff space in the country. With regard to the plots, the Fund has sold over 2000 plots at Tassia to low income earners through the Funds Tenant Purchase Scheme. Through collection of monthly contributions from the workers of this country, the Fund plays a federal agency of mobilizing savings. This notes is re-invested in the economy and conversely helps the government mop up excess liquid.Part of the contributions is used to buy Government Treasury Bills and Bonds and this enables the government to carry out its financial obligations. The Fund has 39 branches spread across the Country and makes deposits in several banks where its branches are. These deposits improve liquidity of the banks enabling the banks to lend loans to the parliamentary law. It also plays the role of an Employer to Human Resource. Currently the Fund has employed 1,800 personn el who in turn support their nuclear and drawn-out families. This can be construed to be a very positive role in the Kenyan Society.In its daily operations, the Fund is a consumer of goods and services. There are several service providers who benefit from them. Thus the NSSF creates employment indirectly to Kenyans by way of utilizing the services of Kenyan Companies. This includes supply of materials such as stationery, security, training, tuition technology and construction. 5 If the proposed conversion of the NSSF from a Provident Fund into a Pension Scheme is effected, it will be paying its members monthly pension as opposed to lump sum payment. This will greatly nurture poverty reduction in Kenya.CORPORATE SOCIAL RESPONSIBILITY In the Funds reforms and changes the scorecard of Trustees and Management have made a decision to participate in Corporate Social Responsibility and involve the society at the undermentioned various levels. Corporate Membership to the Kenya Society for the Blind The Fund is a Corporate Member of the Kenya Society for the Blind and donates Kshs. 50,000/= annually. Target Women and Children When you invest in women you invest in communities. The Fund believes in supporting small and coming(prenominal) womens groups in an effort to eradicate poverty.The Fund gives donations, offers advice, helps with investments and recruits the women through Voluntary Membership. This enables them to save with the Fund for their future. With regard to children, the Fund is actively involved in health campaigning through ventures of Mater Hospital Heart Run. The Fund contributed Kshs. 100,000/= towards this cause in 2007. It plans to set up mechanisms to help educate children who are shining through scholarships and intends to target KCPE and KCSE. The initial plan is to look for a superior child in each province. Standing Donation to the Elderly Members of the Society each year the Fund donates Kshs. 50,000/= to Helpage Kenya, an Organiza tion dealing with the welfare of the Aged. Each year the NSSF also donates foodstuffs and blankets to the elderly. Participation in National Disasters 6 The Fund participates in National Disasters. Last year the organization through its Trustees donated Kshs. 1. 5 million towards Famine Relief. ply members also came together to donate foodstuffs and money for the famine relief. Participation in Freedom of Hunger Walk The Fund gives a donation of Kshs. 00,000/= annually for the Freedom from Hunger Walk and also participates in the walk. Sponsors Athletics Events The NSSF sponsors events carried out by the Kenya Athletics Association. It intends to recruit immature athletes to be its members and educate them on saving and steer them from poverty. Environmental Clean-up Staff Members get involved in environmental clean-up exercises in hospitals. The Staff members in Kisumu help the Women Fish mongers in the market to clean up their stalls. CHALLENGES face up BY THE FUND One lum p sum payment is made to the retiree which is inadequate. The benefits offered to the members are limited. Limited public knowledge on the deprivation on social security. Organizing the informal sector into a unit which can access social security. Slow growth of the formal sector. Retrenchment of Workers. uplifted prevalence of HIV and AIDS. Tendency for employers to artificially understate workers to avoid obligingness The contributions are very modest MILESTONES The autonomy of the Board of Trustees. Remarkable growth in membership. The Funds large market share in the solitude benefits industry. 7 The ability to pay the retirees. The introduction of Voluntary Contribution. The introduction of Funeral Grant. young REFORM INITIATIVES Drafting of a Bill to convert the NSSF into a Pension Trust. Improved Investments portfolio through adherence to guidelines of the REA appointment of custodian etc. internalisation of the Informal Sector into all the NSSFs strategic planning for growth of coverage. betterment of service delivery through the decentralization of all core activities of the Fund to 39 branches spread countrywide. The Board of Trustees and Management are on accomplishment contract