TOPIC EIGHT

NATIONAL SOCIAL SECURITY FUND (NSSF)

Objectives

By the end of this topic the learner should be able to: -

 Understand the operation of NSSF

 Apply for their benefits of NSSF
 Appreciate the role of Retirement Benefit Authority

The National Social Security Fund is a friendly service organization which exists for the public
good. It offers social protection to all Kenyan workers. We provide social security protection to
workers in the formal and informal sectors. We register members, receive their contributions,
manage funds of the scheme, process and ultimately pay out benefits to eligible members or
dependents.

Our Corporate Profile

The National Social Security Fund (NSSF) was established in 1965 through an Act of Parliament
Cap 258 of the Laws of Kenya. The Fund initially operated as a Department of the Ministry of
Labour until 1987 when the NSSF Act was amended transforming the Fund into a State
Corporation under the Management of a Board of Trustees.

The Act was established as a mandatory national scheme whose main objective was to provide
basic financial security benefits to Kenyan upon retirement. The Fund was set up as a Provident
Fund providing benefits in the form of a lump sum.

The National Social Security Fund (NSSF) Act, No.45 of 2013 was assented to on 24th
December, 2013 and commenced on 10th January, 2014 thereby transforming NSSF from a
Provident Fund to a Pension Scheme to which every Kenyan with an income shall contribute a
percentage of his/her gross earnings so as to be guaranteed basic compensation in case of
permanent disability, basic assistance to needy defendants in case of death and a monthly life
pension upon retirement.

The Act establishes two Funds namely, the Pension Fund and the Provident Fund, to provide for
contributions to and payment of benefits out of the Funds.

Specific requirements

Age Benefit: The objective is to replace income security to the elderly through payment of their
savings accumulated over the years during the period they were employed.

Qualifying Conditions
  Attainment of retirement age of 60 years
 Early retirement benefit can also be claimed on attaining 50 years, if the member has
retired from employment.

Requirements (in addition to general requirements)

1. Introduction letter from the Employer or Local Council

Invalidity Benefit: Paid to a contributing member who has lost his/ her earning capacity due to
physical or mental incapacitation as will be certified by a medical doctor

Qualifying Conditions

 Certification by NSSF's medical doctor

Requirements:

1. Disengagement letter OR Termination OR End of Contract letter

2. Clinical notes or documents indicating history of illness together with attendant Doctor’s
recommendation

3. Introduction letter from the previous Employer or Local Council

4. The client may be required to see the Fund Doctor

Survivor's Benefit: This is paid when a contributing member dies while working, spouses and
children are the immediate beneficiaries. In case at the time of death the deceased had neither,
the parents qualify.

Requirements:

1. Certified copy of Letter of administration or Probate and petition for letters of Administration
or Grant of probate

2. Petition is a MUST

3. Death Certificate

4. Letter from Local Council confirming demise of the member and introducing claimant

5. Introduction letter from the employer of the deceased member

Exempted Employment: Paid to a contributing member who joins employment categories that
are exempted i.e. have their social protection schemes that are recognised under the exiting law
and are exempted from contributing to NSSF .e.g. the army, police, prison, civil service and
government teaching service employees or members of any scheme who have received
exemption from the Miister responsible for Social Security in writing.

Requirements

1. Disengagement letter OR Termination OR End of Contract letter

2. Certified copy of appointment letter and posting instructions (either the appointment is
subject to the Pensions Act or the appointing authority provides written confirmation that the
member is pensionable.

3. Certified copy of current pay slip, Warrant card for police officers, and Movement order for
the Army.

Withdrawal Benefit: Paid to a memebr who attains the age of 50 years if he or she has not
been employed under a contract of service for a period of one year immediately preceding his or
her claim.

Requirements (in addition to general requirements)

1. Termination letter from the employer

2. Resignation Letter

Emigration Grant: This is paid to a contributing member who has been working in Uganda and is
leaving the country permanently. It is paid to both Ugandans and non-Ugandans

Requirements:

1. Disengagement letter OR Termination OR End of Contract letter

2. Evidence of exiting the country permanently; Confirmation from the Embassy, One way
exit air ticket, Cancelled OR Expired work permit OR Special Pass clearance from Immigration
Department in case of absence of work permit, repatriation card for the case of refugees.

3. Evidence of permanent residence, Green Card for US immigrants

4. Marriage certificate where applicable and permanent residence or dependant pass

HOW TO APPLY FOR YOUR BENEFITS

 Qualifying members shall apply for benefits at the nearest NSSF office. Members may be
required to provide further evidence.
 In order to avoid inconveniences, a claimant is obliged to provide full proof of identity
and where necessary, an investigation to this effect shall be conducted by the fund.
 Claimants shall be required to fill all relevant forms accurately.
  Claimants are advised to submit the claim in person to the nearest office.
 All the processing of benefits is done at the NSSF offices.
 Benefit forms must be witnessed by the claimant's last contributing employer

Computation of Benefits
A verified claim is processed as follows;

 All contributions remitted to the fund during the members working period are compiled
on the assessment sheet.
 The declared interest is added on the closing balance for each financial year.
 The computed figures plus interest are properly verified before a cheque is written or
money transferred to a members account.

Things You Must Do In Order To Secure Your Benefits

 Ensure that the information you give on the benefit form is correct. It must tally with the
information you gave at the time of registration.

 Attach correct or authentic supporting documents depending on the benefit you qualify
for.

Member's Rights.

 Contributing members have a right to request for their statements of account.

 Contributing Persons have the right to appeal before established channels in case he/she
has any dispute with regard to the benefit payable

RETIREMENT BENEFIT AUTHORITY

The Role of the Authority

Specific objectives of the Retirement Benefits Authority (RBA)

 To regulate and supervise the establishment and management of retirement benefits

schemes.
 To protect the interest of members and sponsors of retirement benefits schemes.
 To promote the development of the retirement benefits sector.
 To advise the Minister for Finance on the national policy to be followed with regard to
the retirement benefits sector.

Relevance of RBA
The creation of the RBA is part of the ongoing financial reform process in the country's economy
geared at mobilizing domestic savings, developing the country's capital markets and enhancing
economic development.

The primary objective of the RBA is to protect the interest of members and sponsors of schemes,
to develop the sector and to alleviate old age poverty through enhanced saving for retirement.

Prior to the creation of the RBA there was no harmonized legal framework governing the sector.
This resulted in the well documented cases of miss-appropriation of scheme funds, dubious
investments of members’ funds, denial of benefits to members, delay in payments of benefits to
members and a myriad of other ills that have bedeviled the sector.

Why Kenya need this Act now

Even though some pension schemes have been well managed there are many cases of others that
have not been run efficiently.

Socio-economic changes have led to the breakdown of the traditional systems of old age support
therefore enhancing the need for well-managed retirement benefits schemes.

Newspapers are replete with stories of denied or delayed benefits, misappropriation of scheme
funds, diversion of scheme funds into sponsors business, underfunded schemes that cannot meet
their obligations, questionable investments, lending of scheme funds to trustees or senior
managers at uneconomic rates and many other problems that are to the detriment of the ordinary
member.

The RBA will only oversee the sector and not directly run schemes or hold scheme funds.
Therefore, schemes that are currently well managed will not have to change much.

The objectives of the Act are to encourage long term saving for retirement and to protect
members and sponsors from the abuses that have occurred in the past.