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National Social Security Fund Act

An Act Of Parliament To Establish A National Social Security Fund, To Provide For Contributions To And The Payment Of Benefits Out Of The Fund; And For Matters Connected Therewith And Incidental Thereto.

  • The objects of the Fund are to—
  1. provide basic social security for its members and their dependants for various contingencies as provided under this Act
  2. increase membership coverage of the social security scheme;
  3. improve adequacy of benefits paid out of the scheme by the Fund
  4. provide a full opt-out at Tier II level of contributions for employers who have or are contributing to pension schemes approved and registered by the Authority
  5. bring within the ambit of this Act self-employed persons to access social security for themselves and their dependants
  6. operate and manage a scheme that is value- adding to its members by, inter alia—
  1. ensuring that the Fund and its social security systems are sustainable and affordable;
  2. retaining the Old Provident Fund for purposes of dealing separately with liabilities, obligations, assets and any matters or issues connected therewith to avoid transferring the same to the Fund established under this Act;
  1. ensuring that the liabilities of the Old Provident Fund are settled within five years from the commencement of the new Provident Fund and the close of the Old Provident Fund
  2. do any other thing or take any measure permitted by this Act for purposes of attaining any or all these objects and for purposes of effective enforcement and application of this Act
  • Every employer who, under a contract of service, employs one employee or more shall register with the Fund as a contributing employer and shall, register his employee or employees, as members of the Fund.
  • Any person who is registerable as an employer under this section shall produce proof of registration with the scheme as a precondition of dealing with or accessing public services.
  • A self-employed person who wishes to become a member of the Fund, may register as a voluntary member and shall, register his employee under a contract of service as a member of the Fund.
  • The Fund shall inform employers and employees of the requirement to register under this Act.
  • Every employer or employee shall be registered with the Fund.
  • Any employer who fails, neglects or refuses to register under this section commits an offence and shall be liable to a fine not exceeding Kenya shillings fifty thousand;
  • An employer registered under this section shall;
  1. keep a proper and up-to-date register or record of the earnings and any other particulars of employees as may be prescribed by the Board;
  2. at all times produce the register or record on demand by a compliance or other officer of the Fund;
  3. retain such register or record for such period as the Board may prescribe, but such period shall not exceed ten years;
  4. An employer who violates any of the provisions of this subsection commits an offence.
  • From the commencement date and subject to the provisions of sub-section (3) and section 21, an employer shall pay to the Pension Fund in respect of each employee in his or her employment;
  1. the employer’s contribution at six per centum of the employee’s monthly pensionable earnings;
  2. the employee’s contribution at six per centum of the employee’s pensionable earnings deducted from the employee’s earnings.
  • Notwithstanding the provisions of subsection (1), the contributions in the first five years shall be deducted in accordance with the Third Schedule.

Tier I contributions shall be credited to the employee’s Tier I Fund Credit and, subject to the provisions of section 21, Tier II contributions shall be credited to the employee’s Tier II Fund Credit.

Every voluntary member shall contribute to the Provident Fund;

  1. a minimum amount of two hundred shillings;
  2. a minimum aggregate contribution in a year of four thousand eight hundred shillings;
  3. contributions may be paid directly to a designated Fund office, by mobile money or any other electronic transfer specified by the Board;
  4. the Fund shall notify the member of the receipt of the contribution as soon as the contribution is received.
  • The contributions made shall be paid into the Provident Fund and immediately credited to the member’s individual account as the Provident Fund Credit provided.
  • If any contribution for which a contributing employer is required to pay to the Fund is not paid within one month after the end of the month in which the last day of the contribution period to which it falls, a sum equal to five per cent of the amount of that contribution shall be added to the contribution for each month or part of a month that the amount due remains unpaid, and any such additional amount shall be recoverable at the same time and in the same manner as the contribution to which it is added.
  • Where it is established by a member or officer of the Fund to the satisfaction of the Managing Trustee that any amount has been paid to the Fund as a contribution when it was not payable under this Act and the amount was paid as a result of a bona fide error, the amount paid in error shall be refunded without interest thereon or may be applied, with the consent of the person who made the payment, to any current liability of that person to the Fund.
  • Any amount which is payable under this Act as a contribution by an employer in respect of himself or his employee that is in excess of the statutory contribution payable under this Act for any period, the amount in excess shall be refunded to the employer or employee, as the case may be, without interest thereon or may be applied, with the consent of the employer or employee, to any current liability of the employer or employee to the Fund.

a prescribed proportion of the benefits accruing to a member under this Fund may be assigned and used by the member to secure a mortgage loan from a bank, building society or other similar institutions and on such terms and conditions as may be prescribed under the Retirement Benefits Act.

  • Where a member is concurrently employed by more than one employer, each individual employer shall be responsible only for his obligations under this Act.
  • Regulations may;
  1. provide for the determination of liability for the payment of contributions in the case of a person who works under the general control or management of a person who is not his immediate employer;
  2. determine the circumstances in which a person is to be regarded, as being concurrently employed by more than one employer.
  • Any amount in excess of the amount due from an employer shall be refunded to both the employer and the employee.

What are Pension Fund and Provident Fund benefits?

  • Any benefits under this Part shall comprise of benefits payable out of the Provident Fund in this Act referred to as Provident Fund Benefits and benefits payable from the Pension Fund, in this Act referred to as the Pension Fund Benefits.

What is the description of Pension Fund Benefits?

  • Pension Benefits shall be of the following description;
  1. Retirement pension;
  2. Invalidity pension;
  3. Survivors’ benefit;
  4. Funeral grant;
  5. Emigration benefit.
  • The Board may from time to time recommend to the Cabinet Secretary any additional benefits that may be provided under this section and any such additional benefits may obtain from the date provided or phased in gradually as circumstances may require.
  • All the benefits derived from contributions made by a member and by an employer in respect of a member shall immediately vest in the member.

 

  • Every person entitled to become a member of the Pension Fund or Provident Fund as the case may be shall furnish to the Fund, in the manner prescribed, particulars concerning himself and his dependant relatives who shall receive benefits under this Part upon his death.
  • A member of the Fund shall update his nomination under subsection (1) at any time and, in any event, annually and the revised nomination shall be submitted to the Fund.
  • A member’s nomination under this section shall be regarded by the Board to be his absolute intention and the Board shall not be responsible for any errors of omission or inclusion contained in the nomination.
  • Where a person has been validly nominated under this subsection, the Board may decline to pay or vary the nominated beneficiary and shall furnish in writing its reasons therefor.

What are the requirements of a retirement Pension?

  • A retirement pension shall be payable to a member who;
  1. has attained pensionable age;
  2. opted for early retirement having attained the age of fifty years but not having attained pensionable age.
  • A member may elect to have the value of his Pension Fund Credit at the date of his retirement applied to a pension payable to the member.
  • The pension payable to a member on his retirement shall be of such an amount as can be purchased by his Pension Fund Credit at the date of his retirement after the exercise of any option .
  • A pension which becomes payable may be purchased in the member’s name from a Registered Insurer of the member’s choice.
  • Where the pension is purchased from a Registered Insurer, the terms and conditions applicable to such pension including options elected by the member and the determination of any benefits arising on his death, shall be agreed between the member and the Registered Insurer and shall be set out in writing by the Registered Insurer.
  • The pension purchased;
  1. shall be compulsory, non-commutable, non- assignable and payable for life;
  2. shall be subject to a minimum ten year guarantee period;
  3. upon purchase, the Fund shall have no further liability in respect of the member, such liability having moved, from the date of purchase, to the Registered Insurer from whom the pension is purchased.
  • A member who is entitled to receive a pension may;
  1. elect to receive part of his or her Pension Fund Credit as a lump sum but the option under this paragraph shall not extend to more than one third of Tier II Pension Fund Credit;
  2. if entitled to receive benefits in respect of Protected Rights from a contracted-out scheme, combine benefits from the Pension Fund Credit with the Protected Rights in a contracted-out scheme for the purposes of securing a pension from the Fund or Registered Insurer of the member’s choice;
  3. if entitled to a pension which is of a Trivial Amount after electing to take any part of the pension as a lump sum under paragraph (a) and after allowing for benefits in respect of Protected Rights from a contracted-out scheme, the member may elect to commute for a lump sum the total Pension Fund Credit due to him and that in determining the pension, the annuity rate applicable shall be for a non-increasing pension with a provision for a ten year guarantee;
  4. elect to take his Tier II Pension Fund Credit in the form of an income drawdown as provided in the Retirement Benefits Act (Cap. 197)
  5. elect to delay receiving benefits which will harmonize with a higher retirement age in the contracted-out scheme in which case the member’s Pension Fund Credit shall continue to accrue interest in the Fund until payment.

· A survivors’ pension shall be paid to the dependants, if the member dies before pensionable age and was contributing to the Pension Fund at the time of his death and not less than thirty six monthly contributions had been made by the member immediately preceding the date of death.

· The survivors’ pension payable shall, in aggregate, be equal in value to the member’s Pension Fund Credit except that the Tier I Credit in respect of the deceased member shall be increased by an amount equal to the last Tier I monthly contributions multiplied by the lower of half the number of months of potential employment between the member’s date of death and attainment of pensionable age and 90 months.

· The survivors’ pension payable shall be held by the Board on trust, and paid to the nominated beneficiary within one year after the death of the member in such proportions as stipulated by the member for the absolute use and benefit of the beneficiary.

· The Board may exercise its option with regard to any nomination under this section.

· Notwithstanding any written law, a benefit payable by the Fund upon the death of a member shall not form part of the assets in the estate of a member.

· Where a deceased member did not satisfy the qualifying conditions, his dependants shall be entitled to the payment of a lump sum benefit equal to his Pension Fund Credit.

  • A member shall be entitled to invalidity pension if;
  1. he suffers such physical or mental disability of a permanent total incapacity as certified by a medical board established pursuant to this section;
  2. had made not less than 36 monthly contributions immediately preceding the date of the invalidity.
  • The invalidity status shall be subject to review at such intervals as the Board may determine.
  • The rate of invalidity pension shall be determined and payable in the same manner as the retirement pension provided under section 36 except that the Tier I Credit in respect of the member shall be increased by an amount equal to the last Tier I monthly contribution by the member multiplied by the lower of half the number of months of potential employment between the member’s date of invalidity and attainment of pension age and ninety months.
  • A member who would have qualified for an invalidity pension but for the requirements of paragraph (b) of this section shall be entitled only to the payment of a lump sum benefit equal to the member’s Pension Fund Credit.
  • The Board shall appoint medical boards for the purposes of examining persons who have claims to benefits under this section and may;
  1. require any person who has a claim to any benefit under this section to submit to an examination by a medical board;
  2. prescribe the procedure for medical boards, guidelines to be followed and reports to be prepared.
  • A Medical Board appointed may, examine or enquire into any matter relating to claims of any benefits under this Act.

 

Emigration Benefit

  • A member shall be entitled to an emigration benefit, which shall be equal to the member’s Pension Fund Credit, if the member migrates from Kenya to a country, other than a country with which a reciprocal agreement is made pursuant to section 64 without any present intention of returning to reside in Kenya.

Funeral grant

  • On the death of a member who has paid at least six monthly contributions immediately preceding his death, a grant for defraying funeral expenses shall be paid to the next of kin in one lump sum of ten thousand shillings.
  • A claim for payment of a funeral grant shall be submitted not later than sixty days from the date of the death of the Member.
  • For the purposes of this section, the next of kin shall be the surviving spouse, or, in the case of an unmarried person, the father or mother, brother or sister or the person responsible for the payment of funeral expenses.

Provident Fund Benefits

  • Benefits payable from the Provident Fund shall be of the following description;
  1. age benefit;
  2. survivors’ benefit;
  3. invalidity benefit;
  4. withdrawal benefit;
  5. emigration benefit.
  • The Board may from time to time recommend to the Cabinet Secretary additional benefits that may be provided under this section and any such additional benefits may obtain from the date provided or phased in gradually as circumstances may require.

Age Benefit

  • A member of the Provident Fund shall be entitled to age benefit if the member has attained the age of fifty years.
  • The age benefit payable shall be a lump sum equal to the member’s Provident Fund Credit at date of entitlement to age benefit.

Survivors’ Benefit

  • The dependant relatives of a member of the Provident Fund shall be entitled upon the member’s death to a lump sum survivors’ benefit equal to the member’s Provident Fund Credit at the date of death, to the extent and subject to the conditions provided under this section.
  • The provisions of section 36(3) to (6) shall apply to any claim to benefit under this section with such modification as shall be necessary.

 

Invalidity Benefit

  • Subject to this Act, a member of the Fund shall be entitled to invalidity benefit if either;
  1. he is subject to such physical or mental disability as to be suffering from permanent total incapacity as certified by a medical doctor;
  2. he is subject to such physical or mental disability as to be suffering from partial incapacity of a permanent nature and is unable by reason of such disability to earn a reasonable livelihood as certified by a medical board.
  • The provisions of section 38(5) and (6) shall, apply to any claim to benefit under this section with such modifications as shall be necessary.

Withdrawal Benefit

  • A member of the Provident Fund shall be entitled to a lump sum withdrawal benefit equal to the member’s Provident Fund Credit at the date of withdrawal if at the time of claiming the benefit the member is no longer in self-employment.

Emigration benefit

  • A member of Provident Fund shall be entitled to emigration benefit if the member emigrates from Kenya to a country other than a country with which a reciprocal agreement is made pursuant to section 64 without any present intention of returning to reside in Kenya.

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