President William Ruto has reaffirmed his government’s determination to reengineer the country’s saving scheme in order to close the investment-savings gap.
According to Ruto, the country’s current social security infrastructure, which includes the National Social Security Fund (NSSF) and private saving schemes, only cater to people in formal employment, leaving the majority of Kenyans in the informal sector out.
“There is no retired Kenyan today who is living on their NSSF retirement benefits. The meager current contribution of Sh200 a month adds up to Sh72,000 over 30 years. There is no rate of return on earth that can grow this into an adequate pension,” Ruto said Thursday when he made his first official statement to a joint sitting of parliament.
“We just have to be honest with ourselves. You cannot pretend you are saving by saving Sh200 bob and it happens across board,” he added.
The President stated that his administration intends to overhaul the country’s social security infrastructure in order to make it more inclusive.
Ruto stated that he will propose a national savings drive to encourage those in the informal sector to set up their retirement savings plan in order to encourage those who are excluded from saving.
“For every Sh2 saved in the scheme up to a maximum of Sh6,000 per year, the government will contribute a shilling for every Sh2 saved. Meaning every Kenyan who will save Sh6,000 a year, the government will give them Sh3,000 per year,” he said.
Ruto’s remarks were in response to comments he made on September 25 in which he stated that the State will follow the Employment and Labour Relations Court’s recommendations regarding certain provisions of the Act.
Ruto stated that his administration had read a three-judge bench ruling that declared the NSSF Act null and void, thereby prohibiting mandatory deductions from employees.
The ruling issued on September 23 chastised the Jubilee Government for failing to obtain Senate approval despite the fact that the law affected both county employees and the budgets of the 47 devolved units.
The President stated that his administration will collaborate with the Senate and the National Assembly to establish a framework for saving in Kenya.
