Kenya plans to increase the mandatory pension contribution by workers in order to eliminate old age poverty, the state-owned retirement scheme said on Monday.
Julius Karangi, chairman of the National Social Security Fund (NSSF) told journalists in Nairobi that the current monthly contribution of 200 shillings (two U.S. dollars) per worker is not sufficient to ensure the fund is liquid enough to cater for retirement needs of Kenyans.
"We hope to operationalize the new National Social Security Fund (NSSF) Act by end of June, so that every Kenyan with an income shall contribute six percent of their 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," Karangi said.
He said that as per the law all workers in the formal sector are required to make contributions to the NSSF, which will soon be transformed from a provident fund to a pension fund.
According to the chairman, NSSF currently has 2.7 million members who make monthly contributions out of a workforce of about 14 million. He added that national pension scheme has over 2.2 billion dollars in assets.
Karangi revealed that Kenya has one of the highest old age poverty rates in East Africa despite being the most developed economy in the sub-region.
He noted that out of the estimated 2.4 million people above the age of 60, about 55 percent live in poverty due to lack of retirement savings.