The Law relating to Social Security in Kenya.

By Kate Kiama.

Social security can be defined as the basic system which gives benefits to different groups of people including but not limited to individuals, children, employed, and unemployed, retired or elderly individuals. The ILO defines Security[1] as the protection which society provides for its members through a series of public measures against the economic and social distress that otherwise would be caused by stoppage, or substantial reduction of earnings resulting from sickness, maternity, employment injury, unemployment, invalidity, old age and death including the provision of medical care and the provision of subsidies for families with children.

            This discussion is limited to the law relating to social security in Kenya. Social security is important for the well being of workers, their families and the entire community. It is a means of creating social cohesion, thereby helping to ensure social peace and social inclusion. It is an indispensable part of the government social policy and an important tool to alleviate poverty. It can through national solidarity and fair burden sharing, contribute to human dignity, equity and social justice. It is also important for political inclusion, empowerment and the development of democracy.

Kenya has several types of schemes which offer social security which can be divided into three broad categories:-

        i.            Public Schemes - These are established by Acts of Parliament and include the;

• The NSSF Fund[2]

• The NHIF Fund[3]

• The Civil Servants Pension Fund[4]

• The Local Authorities Pension Trust

• The Public Universities Superannuation Pension Fund

• The Workmen’s Compensation Fund

• The Widows & Orphans Compensation Fund

• The Parliamentary Pensions Fund

The NSSF fund was established in 1965 after the enactment of the NSSF Act Cap 258.Prior to 1987 the fund operated under the Minister of Labour as a department under the Ministry. The Act was amended in 1987 and its effect was to make the fund a parastatal with its own management under a board of trustees. The scheme is a compulsory and mandatory scheme for all Kenyan’s in formal employment. There is a current Bill in Parliament aimed at amending the qualification of membership to the NSSF by import of the Federation of Kenyan Employers and COTU.

The NHIF fund was a department under the Ministry of Health from 1966-1998.The Fund as with the NSSF was converted into a state corporation and is aimed at improving the efficiency and effectiveness of medical insurance. The core mandate is to declare insurance on members and their immediate dependants. As with the NSSF fund, it is mandatory to all persons in formal employment and is also open to anyone above the age of majority.

The Pension Fund was established under the Pension Act Cap 189 Laws of Kenya and is a departmental office under the Ministry of Finance. It applies to public officers and civil servants. Section 17 of the Pension Act provides for the payment of pension benefits to dependants on the death of the public officer or civil servant. 

     ii.            Occupational Schemes- are run by employers for their employees and are underwritten by private insurance companies.

   iii.             Individual Schemes –are private schemes designed for the employed, self-employed and/ or for those in non-personable employment.

The public schemes, occupational and individual schemes cover workers mainly in the formal sector. They form the first pillar where membership is not optional but compulsory. The Occupational schemes form the second pillar where membership is either voluntary or mandatory and are privately managed. The voluntary schemes form the third pillar where membership is voluntary. It is important to note that the Retirement Benefits Authority (RBA) is the regulator and supervisor of private pension schemes in Kenya.

The Constitution pursuant to Article 43 (3) enshrines the concept of social security. The area is in dire need of reform and might benefit significantly by adopting a single broad Act with a single regulator to manage the area better.[5]

 

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[1] ILO resolution on social security, Geneva 2001

[2] Established by the National Social Security Fund Act Cap 258

[3] Established by the National Health Insurance Fund No 9 of 1998

[4] Established by the Pension Act Cap 189

[5] Best Practices should be adopted by the South African Social Security Agency Act, a comprehensive act on social security in South Africa.