MCAs to pay NSSF Tier II contributions after senate rejects exemption
Initially introduced in the Senate in February last year by Majority Leader Aaron Cheruiyot, the Bill seeks to set up a new pension plan for MCAs while also guiding the transition from existing schemes.
Members of County Assemblies (MCAs) will no longer be excluded from paying Tier II contributions to the National Social Security Fund (NSSF) after the Senate removed a proposed exemption in a draft Bill intended to create a pension scheme for the ward legislators.
The revised Bill, which has already been forwarded to the National Assembly for consideration, also obligates County Assembly Boards to match the MCAs’ Tier II contributions in full, in line with the structure under the NSSF Act 2013.
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Initially introduced in the Senate in February last year by Majority Leader Aaron Cheruiyot, the Bill seeks to set up a new pension plan for MCAs while also guiding the transition from existing schemes.
The original version included a clause that would have exempted MCAs and their employing boards from the Tier II remittances, but that section has now been dropped from the latest copy.
The NSSF Act, which began implementation in February 2023 after years of court delays, introduced a two-tier contribution model.
As it stands, employees and employers each contribute six per cent under Tier I and Tier II, with the current maximums set at Sh960 and Sh7,680 per month, respectively.
Tier I is based on the lower earnings limit, currently Sh8,000, while Tier II is calculated from the difference between the lower and the upper earnings limit.
The upper limit for this year stands at Sh72,000, having doubled from Sh36,000.
The effect of the amendment means MCAs will now be subject to the same NSSF requirements as other public employees and will not be allowed to channel their Tier II contributions into private pension schemes.
This option, known as opting out, has been a point of contention between various schemes and the NSSF.
Some retirement schemes, especially those for county executive members, have in the past accused NSSF of blocking their efforts to opt out and redirect the funds. The fund has maintained that opt-out approvals are not automatic.
In November, the Council of Governors sent a request to NSSF asking for a blanket exemption for counties and their employees from Tier II payments.
However, CoG chief executive Mary Mwiti said the request was declined.
“NSSF said each county must apply individually and settle any pending debts or obligations before being considered for exemption,” she said.
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