The government should make contribution to the National Social Security Fund and the National Health Insurance Fund compulsory to both informal and formal workers as a way of increasing national saving and build funds to finance welfare spending.
Speaking on Tuesday during budget hearings at The Stanley hotel, Zimele Asset Management Company asset manager Sammy Muvellah said this would enable the government to fund its activities with domestic resources and free it from expensive external sources.
“The government should make it mandatory to contribute to pension schemes to fund welfare benefits and avoid relying on the Treasury and increasing taxation. It should allow those with alternative schemes to pay the minimum rate at NSSF and continue being members of their chosen schemes,” said Mr Muvellah.
NSSF should also be regulated by the Insurance Regulatory Authority. Currently, Kenyans save only 4.2 per cent of wealth created against a proposed national savings of at least 30 per cent to bring stability to the economy. The government is currently implementing a proposal to broaden the reach of NHIF by increasing individual contribution where the highest contributor will remit Sh2,000 per month with the lowest contributor parting with Sh150.
The current levels of contributions stand at between Sh30 and Sh320 per month. The new rates are meant to help the government provide health coverage to over nine million Kenyans who cannot afford to pay for medical bills.
“The rate of savings is currently too low and cannot support any welfare schemes. The savings should be between 30 and 35 per cent to the Gross Domestic Product (national wealth),” Mr Kwame Owino, chief executive officer, Institute of Economic Affairs, said.
Mr Muvellah said the government needed to find ways to expand the tax base beyond the 2 million formal workers and capture the other nine million, mostly in the informal sector.
He said the government must not always result to the foreign funding, that raise interest rates and impede on the expansion of productive sectors. Political parties have been promising welfare programmes in education and health in their campaigns ahead of the March 4 General Election.
Conclusion: The savings should serve the mutual interests of the government and employees, so as to make the idea attractive.