Three Judge bench sitting at Machakos High Court quashed the NSSF Act of 2013 stating it is unconstitutional.
The High Court has halted a bid to tenfold monthly contributions to the National Social Security Fund (NSFF) up to Sh2,068 after ruling that the legislation supporting the increases was unconstitutional.
The NSSF Act of 2013 was quashed by Justices Mathews Nduma, Hellen Wasilwa, and Monica Mbaru, who said it was not subjected to public participation, in violation of the Constitution, which requires community input before major decisions are made.
The NSSF Act of 2013 sought to increase employee monthly contributions from the current Sh200 monthly and required employers to match the payout.
The increased pension contributions were intended to help the NSSF build a larger retirement pot and provide workers with monthly stipends after retirement, rather than the current one-time payment.
The decision is a setback for President William Ruto’s social security plan, which includes increasing NSSF monthly contributions.
According to the President, the current rate is too low to save enough for a comfortable retirement.
However, the court decision has provided relief to employers who were expected to raise billions of shillings to match the workers’ contributions, a blow to firms that are still struggling to recover from the coronavirus-induced slump that resulted in job cuts, hiring freezes, and business closures.
The three judges ruled that the frozen NSSF Act was illegal because its promoters failed to obtain Senate approval despite the fact that the law affected county employees and devolved government finances.
“An order is issued prohibiting the government from compelling or requiring mandatory registration, enrolment or listing of any employer or employee whether registered as a member or any retirement benefits scheme or not ….to register, enroll or list and contribute their earnings or any party,” said the judges.
