National Social Security Fund Act

This Act may be cited as the National Social Security Fund Act.

Section 2 provides interpretation definitions including who counts as dependants of a deceased person, categories of persons employed or ordinarily resident in Kenya for purposes of the Act, who is treated as undergoing full-time instruction or an apprentice, and that references to the Act include regulations made under it.

Establishes the National Social Security Fund and states it is vested in, operated and managed by the Board.

The Fund's objects include providing basic social security for its members and their dependants for various contingencies as provided under this Act.

The Board shall exercise all powers necessary for the proper performance of its responsibilities under this Act.

The Board must hold at least four meetings each financial year and ensure no more than four months pass between meetings; the Chairperson must preside at meetings; the Board may invite non-voting attendees and regulate its procedures.

The Board may establish committees, delegate responsibilities to them, and appoint non-members to those committees; appointed persons shall serve on terms determined by the Board.

Members of the Board or any Committee are entitled to be paid remuneration, fees or allowances as determined by the Board; those payments are subject to the approval of the Cabinet Secretary.

Board members must disclose any private interest (including those of spouse, immediate relative or associate) in a matter at a Board or Committee meeting as soon as practicable after the meeting starts, must not take part in consideration, discussion or vote on that matter unless the Board decides otherwise; disclosures must be recorded; contravention is an offence and may lead to disqualification and other court-imposed penalties.

The Board must appoint a managing trustee; the managing trustee is the Fund's chief executive officer, has specified duties (including ensuring member contributions are paid, determining and paying benefits, acting as accounting officer), serves a three-year term renewable once, and may be suspended or removed for listed grounds including corruption.

The Board may appoint officers and other staff of the Fund and may delegate any of its powers to Trustees, the Managing Trustee or any officer, subject to terms and in writing.

The Board must appoint Compliance Officers who can inspect workplaces, require information and documents, and may delegate powers to public officers; obstructing or refusing Compliance Officers is an offence punishable by fines.

Section 18 names the Old Provident Fund and related funds.

Employers who employ one or more employees must register with the Fund as contributing employers and register their employees as members; the Fund must inform employers and employees; failure to register is an offence punishable by a fine up to Kenya shillings fifty thousand.

Employers must pay a contribution equal to six percent of an employee's monthly pensionable earnings; employees have a six percent contribution deducted from earnings; employers must pay the contribution monthly on the ninth day or a later Board-prescribed date.

Employers may opt to pay Tier II contributions into a contracted-out scheme; employers must give the Authority written notice at least sixty days before opting out and include scheme details; the Authority must respond within thirty days if the scheme meets the Reference Scheme Test; approved schemes receive Tier II credits and must record Protected Rights; employers must pay Tier I contributions to the Pension Fund.

An employer may deduct an employee’s contribution from the employee’s earnings, but must not deduct the employer’s contribution and must pay the employer’s contribution from his own resources and remit it to the employee’s account under this Act.

The Fund must notify a member when it receives their voluntary contribution.

The Board must establish and maintain individual accounts (Pension Fund Credit) for each Pension Fund member; the Fund must provide annual benefit statements and make required information available online; members may request statements on notice.

A person who stopped being a Fund member because they received an emigration benefit must register (compulsorily or voluntarily) as a member if at any later time they become liable or eligible under the Act.

Regulations to provide for voluntary registration of persons who are self-employed.

Contributing employers must pay required monthly contributions by the prescribed day; late payments incur an added charge equal to five per cent per month, and amounts paid in error or in excess may be refunded or applied to liabilities with consent.

The Board must pay out of the Provident Fund monies it determines to persons who do not qualify for Pension Fund benefits, and such payments must follow Part V.

Certain persons listed in the First Schedule are exempt; an exempt person must not be registered as a member of the Fund but, subject to subsection (2), may elect to register as a voluntary contributor.

Member accounts and benefits are inalienable and not assignable; specified dispositions against them are prohibited, and a director, officer, servant or agent of the Fund who contravenes this section commits an offence.

A member may assign a prescribed proportion of their Fund benefits to secure a mortgage loan from banks or similar institutions, subject to terms prescribed under the Retirement Benefits Act.

If a member works for more than one employer, each individual employer is responsible only for that employer's obligations under the Act.

Establishes the National Social Security Fund Board of Trustees and vests it with responsibility to direct and manage the Fund.

The Cabinet Secretary appoints the Chairperson from among the Trustees appointed under paragraph (d)(iii).

A person is disqualified from appointment if convicted of a criminal offence and sentenced to imprisonment for a period exceeding six months without the option of a fine.

Trustees appointed under section 6(d)(i), (ii) and (iii) hold office for three years and may be re-appointed once; the Cabinet Secretary staggers appointments of one third of those members by two months; members may vacate or be removed for resignation, absenteeism, bankruptcy, disqualification, conviction with six months+ imprisonment, prolonged illness, or inability to discharge duties.

If the office of Chairperson or a Trustee appointed under section 6(d)(i), (ii) or (iii) falls vacant prematurely, the vacancy must be filled in the same manner as specified for that office under section 6, and the person appointed will serve the remainder of the term.

This section defines two categories of benefits: Provident Fund Benefits (payable out of the Provident Fund) and Pension Fund Benefits (payable from the Pension Fund).

Lists pension fund benefits and says benefits from member and employer contributions vest immediately in the member; the Board may recommend additional benefits to the Cabinet Secretary.

Members must nominate dependants to receive benefits; members must update nominations (at any time and at least annually); the Board may refuse or vary a nominated beneficiary but must give written reasons; the Board treats a member's nomination as the member's absolute intention and is not responsible for errors in the nomination.

Section 36 allows a member to elect how their Pension Fund Credit is applied at retirement (for example, to purchase a pension or take certain lump sums and drawdowns); Registered Insurers must put agreed pension terms in writing; upon purchase the Fund has no further liability.

A survivors' pension is payable to dependants if a member dies before pensionable age while contributing and having made not less than thirty six monthly contributions immediately before death; the pension equals the member's Pension Fund Credit with a specified Tier I adjustment; the Board must hold the pension on trust and pay the nominated beneficiary within one year; dependants may be entitled to a lump sum equal to the Pension Fund Credit if qualifying conditions are not met.

Section 38 sets rules for invalidity pension: conditions for qualification, review of invalidity status, how the rate is calculated, entitlement to a lump sum where contribution requirement not met, medical board examinations and powers to examine claims.

A member who migrates from Kenya (not to a reciprocal-agreement country) with no present intention to return is entitled to an emigration benefit equal to their Pension Fund Credit.

When a member who paid at least six monthly contributions immediately before death dies, the next of kin is to receive a funeral grant of ten thousand shillings in one lump sum; claims must be submitted within sixty days of the member's death. (Defines who counts as next of kin.)

Section 41 lists types of provident fund benefits and allows the Board to recommend additional benefits to the Cabinet Secretary, which may be provided immediately or phased in.

Members of the Provident Fund are entitled to an age benefit when they have attained the age of fifty years.

Dependants of a Provident Fund member are entitled, on the member's death, to a lump-sum survivors' benefit equal to the member's Provident Fund Credit at date of death, subject to the conditions in this section.

Persons described as 'he' who meet the stated medical criteria may claim an Invalidity Benefit.

A member of the Provident Fund is entitled to a lump sum withdrawal benefit equal to their Provident Fund Credit if, when claiming, they are no longer in self-employment.

A member of the Provident Fund is entitled to an emigration benefit if they emigrate from Kenya to a country that does not have a reciprocal agreement under section 64 and they have no present intention of returning to reside in Kenya.

Section 47 authorizes regulations regarding benefits under this Act.

If a person fails to disclose or misrepresents material facts and obtains a benefit they are not entitled to, they must repay the benefit within a period the Board directs; contravening the section is an offence punishable by a fine up to 300,000 shillings, imprisonment up to three months, or both.

Section 49 lists the sources of the Fund's monies and provides that the Fund must invest funds not currently needed for Fund purposes in accordance with the Retirement Benefits Act; the Board may, in its sole discretion, arrange or facilitate staff loans or advances through credit institutions on terms it considers appropriate.

Expenses for administering the Fund shall be paid out of the Fund and must not exceed two per cent of total Fund assets; the Board must take measures so that this percentage reduces and is capped at one and a half per cent in the sixth year after commencement.

The Board must keep proper accounting records for the Fund and its undertakings; the Auditor General may allow a private audit firm in writing; and the Board must publish the audited accounts in at least two widely circulated daily newspapers within three months after the audit is completed.

The state of the Fund must be valued at least once every three years.

Disputes about contributions, benefits, registration, dependants or cancellations must be referred to the Tribunal set out under the Retirement Benefits Act (Cap. 197).

Officers (and employees) of the Fund must not solicit or receive improper payments, enter agreements to defraud the Fund, improperly disclose protected Fund information except in specified circumstances, or use their position to enrich themselves; employees who conspire or aid offences face fines up to two million shillings or imprisonment up to two years or both and forfeiture; the Board may also take disciplinary action; provisions apply to Trustees with modifications.

Evasion of payment of any contribution or any other amount that may be due is identified as an offence.

Criminal proceedings under this Act may be instituted and conducted by the Director of Public Prosecutions or by an officer of the Fund authorized by the Director of Public Prosecutions; the Court may order a person convicted under this Act to pay outstanding contributions plus interest or penalty, recoverable as a fine and payable to the Fund for Members' accounts.

Directors and officers of a corporate body who are involved in an offence are also liable for that offence.

An authorized officer of the Fund may institute and conduct actions to recover contributions or penalties under the Act.

On application on behalf of the Fund, attachments may be issued against the property of an employer in execution of a decree and such property may be seized, sold or otherwise realized.

The Board may reopen a case to recover interest that was previously remitted if facts justifying reopening come to the Board's notice.

Members of the Board and officers, employees or agents of the Fund are protected from personal liability for acts done in good faith while executing the Board's functions, powers or duties.

The Fund remains liable to pay compensation or damages to any person for injury or loss caused by the Fund's exercise or failure of exercise of powers or duties under this Act or any other written law.

The Board must, at the Fund’s expense and within six months after the Fund's financial year ends, convene an annual general meeting of the Fund’s members to be attended by employer and employee delegates; the AGM must be conducted in accordance with the Retirement Benefits Act (Cap. 197).

Allows reciprocal social security arrangements with non-EAC countries: the Cabinet Secretary may make regulations to implement such agreements; the Fund, Board and employers have specified duties for contributions, records, sharing information and handling member accounts, including special rules when employees work abroad for up to or beyond three years.

The Fund is exempt from Stamp Duty on receipts, contracts, instruments or other documents executed by or on behalf of, or in favour of, the Fund, and on payments of benefits or refunds of contributions under this Act where otherwise the Fund or a person acting for it would be liable.

The Fund is not liable to pay income tax on its income.

Section 67 requires that contributions to the Pension Fund made by a person under this Act, including contracted-out schemes at the prescribed rates, shall count as tax-deductible expenses for computing taxes payable by that person or, where applicable, by an employee under relevant income tax law.

The Cabinet Secretary may make regulations to carry out and give effect to this Act, including detailed matters such as eligibility, evidence, transitional arrangements and procedural forms.

Any person guilty of an offence under this Act, or who contravenes its provisions or regulations for which no penalty is expressly provided, is liable to a fine not exceeding one hundred thousand shillings.

The Act applies to the Government as an employer, to coordinate and accommodate public servants joining the Fund and deal with related matters.

The requirements of this Act are in addition to requirements imposed by the Retirement Benefits Act (Cap. 197).

Section 72 repeals the National Social Security Fund Act (Cap. 258) and provides that the transitional provisions set forth in the Second Schedule shall apply with respect to transitional and saving arrangements from the commencement date.