State asked to suspend statutory contributions
Zachary Ochuodho @zachuodho
The government has been asked to suspend various statutory payments for six months in a bid to cushion Kenyans from tough economic times following the coronavirus outbreak.
The Actuarial Society of Kenya (TASK) said statutory contributions such as National Social Security Fund (NSSF) and National Hospital Insurance Funds (NHIF) should be suspended to reduce the strain caused by the pandemic.
The move, it said would provide relief to employers and mitigate retrenchments and salary cuts, ease financial pressure on consumers of pension products as well as ease the financial pressure on the public and industries.
Raft of measures
Task chairman Moses Mutuli said the society, through its Covid-19 taskforce, has made a raft of measures which if implemented would provide a relief and cushion Kenyans from the impact of coronavirus.
Mutuli said there is also need for the government to relax Retirement Benefits Authority (RBA) Act to enable members of funds to access cash-backed loan of up to 25 per cent of the funds in their retirement account subject to a maximum of Sh500,000.
“Freeze on interest payments on pensions assets for a period of one to two years will unlock Sh120 billion for the government in two years which can then be deployed for food and income security or enhancing medical infrastructure,” he said.
TASK argues that NSSF should offer the government a soft loan in excess of Sh25 billion repayable over an agreed period of time.
Mutuli, who also doubles as the chairman of TASK, said landlords should also be notified not to distress tenants (both commercial and residential) for a period of three months and be open to renegotiation of leases.
He said although in developed countries the vulnerable are provided with significant fiscal and monetary incentives in the fight against Covid-19, however, in the absence of the fiscal ability, home-grown solutions be found in tackling the crisis.
According to TASK, a solution to the issue in Kenya can only be found if industries such as pensions and insurance were tapped or mobilised to provide some of the immediate financing needed.
They also proposed that medical insurers (both private and public) have relatively high exposure to the Covid-19 pandemic due to the expected cost of medical claims due to inpatient and outpatient cases.
“Actuarial Society of Kenya will utilise the ‘official model’ currently in place by the Ministry of Health for purposes of projecting the expected infections, admission and mortality in medical institutions,” Mutuli said.
He said the Covid-19 pandemic has some far-reaching impacts on the local economy and should the pandemic persist for the months ahead the country is likely to experience a recession.
The government has already laid out a raft of measures to protect the public against the economic impacts of the outbreak.