The Central Organization of Trade Unions (Cotu) has backed President William Ruto’s proposal to increase retirement savings deductions from Sh200 to 6% of an employee’s monthly salary.
Cotu secretary general Francis Atwoli stated that the current National Social Security Fund (NSSF) deduction rate is insufficient and the lowest in the East African region.
“COTU would like to make it clear to all Kenyan workers and Kenyans, in general, that we fully support the increment in NSSF deductions from the current KSh 200 to the 6% rate as captured in the NSSF Act. This increase has been long overdue, considering it is not just the lowest in the East Africa region but also has been COTU’s view that the current deductions are critically inadequate,” Atwoli said.
Atwoli said an increase in NSSF deductions would cushion employed Kenyans against poverty at old age.
“For instance, a worker who has worked for 30 years being deducted Sh200 monthly can only take home Sh144,000 (subject to inflation) upon retirement. Such an amount ultimately leaves retirees exposed to old-age poverty. On the other hand, a worker earning Sh50,000 a month and having worked for 30 years being deducted 6 per cent with an equal top-up from the employer will take home Sh2.1 million (subject to inflation) upon retirement,” said Atwoli.
Atwoli called upon Kenyan workers to fully embrace the proposed rate, saying that it is within the law and is also of great benefit upon retirement.
“We, therefore, call upon Kenyan workers to fully embrace the 6 per cent rate as it is within the law and also of great benefit to them upon retirement,” added the COTU boss.
The trade unionist’s remarks come on the back of President Ruto’s quest to have cases opposing new NSSF deductions be dropped.
According to the president, the cases had been filed by COTU-Kenya and the Federation of Kenya Employers (FKE).
COTU, however, says it doesn’t have any active court case against the increased NSSF deductions.
“We would like to make it clear that COTU-Kenya does not have any active case against NSSF. COTU (K) had, however, in 2014 filed a case seeking an order to suspend the implementation of the NSSF Act of 2013 for reasons that, first, workers, through COTU (K) were not represented in the NSSF Board and, second, the NSSF did not have a substantive Managing Trustee who would have overseen the implementation of the Act.
“These two reasons, namely, the lack of proper governance structure, then, within NSSF, and the lack of workers’ representatives in the NSSF Board necessitated the case against NSSF. However, COTU (K) withdrew the case against NSSF in October 2020 after the two issues were resolved,” said Atwoli.
With COTU now claiming that it has no active cases against the NSSF, only the FKE remains with a complaint against the NSSF.
The High Court ruled in mid-September 2022 that the government could not increase mandatory NSSF deductions.
The court ruled that the requirement did not require public participation, which violated the Constitution’s requirement for community input before major decisions are made.
