Enforcement of contentious NSSF Act illegal, governors say

The National Social Security Fund (NSSF) faces more hurdles after the Council of Governors (CoG) declared the enforcement of the contentious NSSF Act 2013 illegal.

An advisory from CoG says the ="https://www.standardmedia.co.ke/business/business/article/2001490363/supreme-court-returns-nssf-rates-case-to-court-of-appeal">Supreme Court's decision reinstated< the previous status of the NSSF Act 2013, hence its implementation and enforcement is illegal.

The advisory from CoG Chief Executive Mary Mwiti adds to NSSF’s woos, considering just a week ago, the Association of Pension Trustees and Administrators of Kenya (Aptak) disregarded a directive from the national pension fund that contributions should continue being made as per the enacted Act of 2013.

Ms Mwiti said the directive by NSSF vide public notice dated February 22, 2024, following the Supreme Court judgement is ill-advised as it is not grounded on any law and insisted that the true and legal status is that the NSSF Act is unconstitutional.

“The upshot is that no employer or employee should be compelled to register with or contribute to the NSSF under the provisions of the NSSF Act of 2013, and the six per cent employer-employee contributions Tier I and Tier II) are in essence inapplicable, null and void by virtue of unconstitutionality of the 2013 Act,” reads the advisory from the Council.

The apex court while delivering its judgement referred the case back to the Court of Appeal. The primary argument in the case was if the Employment and Labour Relations Court (ELRC) has the jurisdiction to hear the case, which the Supreme Court found that it had.

The Employment and Labour Relation ="https://www.standardmedia.co.ke/explainers/article/2001457939/what-you-need-to-know-about-nssf-contributions#google_vignette">Court had stopped the implementation< of the NSSF Act 2013 which aggrieved the NSSF Board of Trustees. It went to the Court of Appeal.

The Court of Appeal on February 3, 2023, overturned the decision of the Employment and Labour Relation Court on grounds that it did not have the jurisdiction which informed the Supreme Court case.

CoG notes that the decision then delivered by the ELRC on September 19, 2022, is the operative position which indicates that contributions to the national pension fund should be made as per the NSSF Act, 1965.

“The current legal position may change,” says Ms Mwiti. “For instance, the NSSF board or any aggrieved party may seek a stay of the execution of the judgement of Employment and Labour Relations Court, which may alter the legal status of implementation of the Act and deductions thereunder.”

During a recent meeting organised by Enwealth Financial Services, a pension fund manager, Aptak dismissed the directive from NSSF on contributions. “The direct consequence of that (Supreme Court decision), is that the NSSF Act 2013, as we speak today, is a non-existent law in our books,” said Aptak Secretary General Boniface Mwangangi.