Retirement is an inevitable part of life that everyone must plan for. However, many people fail to save enough money to support their retirement lifestyle. This is especially true for those who work in the informal sector or those who have low-income jobs.
The National Social Security Fund (NSSF) Kenya was established to provide a safety net for these individuals and ensure that they have some form of financial security in their old age. In this article, I will explore why NSSF is the best option for anyone seeking to secure retirement. Especially for the informal sector, entrepreneurs, and the poor.
- Mandatory Contribution
NSSF is a mandatory retirement savings scheme that requires all employers and employees to contribute a certain percentage of their income to the fund. This ensures that everyone has a retirement savings plan in place, regardless of their income level.
- Affordable Contributions
The contributions required by NSSF are affordable for all income earners, with a maximum contribution of 200 KES per month for employees and 400 KES per month for employers. Though with the new Act in place, contributions have gone up.
The NSSF Act now provides for a monthly contribution equivalent to 12% of an employee’s monthly salary. 6% of the said contribution is deducted from the employee’s salary while the other 6% is paid by the employer. There will be a lower earnings limit (LEL) for employees who make less than KES. 6,000, with an upper earnings limit (UEL) for employees who earn KES. 18,000 or above.
- Investment Returns
NSSF invests the contributions in various investment vehicles, including bonds, equities, and real estate. These investments generate returns that are paid back to members in the form of dividends.
- Low Fees
NSSF charges very low fees for its services, which ensures that members get to keep most of their investment returns.
- Long-Term Savings
NSSF is a long-term savings plan, which means that members cannot access their contributions until they reach the retirement age of 55 years.
- Guaranteed Benefits
NSSF guarantees its members a retirement benefit that is calculated based on the contributions made and the investment returns earned. This ensures that members receive a guaranteed income in their retirement years.
- Death Benefits
NSSF also provides death benefits to the beneficiaries of members who pass away before retirement. This ensures that the family members of members are not left in financial distress in the event of their demise.
- Disability Benefits
NSSF also provides disability benefits to members who become disabled and are unable to work. This ensures that members are not left in financial distress in the event of a disability.
- Portability
NSSF is a portable scheme, which means that members can transfer their contributions from one employer to another if they change jobs.
- Tax Benefits
Contributions made to NSSF are tax-deductible, which means that members can reduce their tax liability by contributing to the scheme.
- Access to Credit Facilities
Members of NSSF can access credit facilities based on their contributions. This ensures that members can access affordable credit when they need it.
- Financial Literacy
NSSF provides financial literacy programs to its members to ensure that they understand the importance of saving for retirement and how to manage their finances.
- Online Services
NSSF provides online services to its members, which ensures that members can access their account information and make contributions online.
- Government Oversight
NSSF is overseen by the Kenyan government, which ensures that the fund is well-managed and that the interests of members are protected.
- Actuarial Reviews
NSSF conducts regular actuarial reviews to ensure that the fund remains sustainable and that it can meet the future retirement needs of its members.
- Social Responsibility
NSSF also engages in social responsibility programs, including education and health programs, which benefit its members and the community at large.
- Customer Service
NSSF provides excellent customer service to its members, ensuring that members can access information and assistance when they need it.
- Trustworthy
NSSF is a trustworthy organization that has been providing retirement benefits to Kenyans for over 50 years. This ensures that members can trust the fund to manage their retirement savings.
- Flexibility
NSSF offers flexibility in terms of the type of retirement benefit that members can choose. Members can opt for a lump sum payment or a pension payment for a specified period.
- Peace of Mind
By contributing to NSSF, members have the peace of mind that they have a retirement savings plan in place. This ensures that they can enjoy their retirement years without financial worries.
NSSF Kenya is the best option for anyone seeking to secure retirement. The mandatory contributions, affordable fees, investment returns, guaranteed benefits, death and disability benefits, portability, tax benefits, access to credit facilities, financial literacy programs, online services, government oversight, actuarial reviews, social responsibility programs, excellent customer service, trustworthiness, flexibility, and peace of mind make NSSF an excellent retirement savings plan. It is therefore essential that all Kenyans take advantage of this scheme and start saving for their retirement today.
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