Kenya's Social Welfare Framework for Retirees

UNIVERSITY OF NAIROBI
SCHOOL OF LAW
THE STATE’S RESPONSIBILITY IN PROVIDING
FOR THE SOCIAL WELFARE OF THE RETIRED
WORKER IN KENYA: AN ANALYSIS OF THE
REGULATORY FRAMEWORK
RESEARCH PAPER SUBMITTED IN PARTIAL
FULFILMENT OF THE REQUIREMENTS FOR THE
AWARD OF THE BACHELOR OF LAWS (LL.B) DEGREE
COURSE
MAINA JESSICA KEMUNTO
MAY 2014

DECLARATION
I, Maina Jessica Kemunto, do hereby declare this dissertation to be my original work
and that it has not been submitted elsewhere nor is it due for submission for a degree
in any other institution.
Signed: .................................... Date: .............................
This dissertation has been submitted to me, Ms. Naomi Njuguna, for examination
with my approval as supervisor, University of Nairobi.
Signed: ..................................... Date: .............................
i

Dedication
To the Mainas
Dad for the choice of topic dear to you, Mum for your constant love & motivation,
Lynda for showing me the way.
To the future generation: David, Rubi, Lauren and Evan.
ii

Acknowledgement
All possibilities start with God.
Ms. Naomi Njuguna for her guidance, knowledge and patience throughout
The friendship and camaraderie of those who encouraged me when the tank was
running low
The University of Nairobi community without which I would not have met the spirit
of the law
iii

Abstract
This research paper examines the avenues available for the Kenyan retiree to obtain
social welfare provided by the state. The need for such a study is established through a
background of the predicaments of retired persons in Kenya. The first chapter thus
elaborates on the background to the problem, the justification to the study, the
objectives of it and the methodology of this research. Chapter 2 subsequently
introduces the concept of social welfare, details its history as well as outlines certain
problems facing Kenyans at retirement. The essence of social welfare and its resultant
policy types are discussed with a view of understanding its development as a solution
for problems faced upon retirement. Chapter 3 outlines Kenyan legislation on the
matter and its implementation. It zeroes in on the level to which social welfare has
been catered for by the state through legislative developments over the years. A look
at legislative measures that are geared toward easing socio-economic concerns gives
an indication as to the social welfare environment presently subsisting in Kenya. A
comparative analysis between Kenyan social welfare policy and Australian retirement
social welfare is contained in the fourth chapter. This allows an evaluation of Kenya’s
position on the matter in contrast to global considerations on the matter. Conclusions
are then possible as to the level attained and subsequently the way forward as regards
the Kenyan retiree and the role social welfare can play in their golden years. Chapter 5
is thus a summary of the findings of the research. This includes an outline of the
downfalls as well as developments of social welfare available to retirees in Kenya. In
addition it contains propositions as to improvements that may be made in the
provision by the state of social welfare to retirees in Kenya.
iv

Table of Contents
DECLARATION................................................................................................................i
Dedication..........................................................................................................................ii
Acknowledgement............................................................................................................iii
Abstract.............................................................................................................................iv
Introduction to the Study.........................................................................................................vii
1.1 Introduction and Background to the problem................................................................vii
1.2 Statement of the Problem.................................................................................................x
1.3 Justification of the Study................................................................................................xii
1.4 Research questions........................................................................................................xiii
1.5 Research Methodology.................................................................................................xiii
1.6 Objectives of the Study.................................................................................................xiv
1.7 Limitations/Scope of the study......................................................................................xiv
1.8 Hypothesis and assumptions..........................................................................................xv
1.9 Theoretical framework..................................................................................................xvi
1.10 Literature Review.......................................................................................................xvii
Historical Development of Social Welfare..............................................................................xx
1.11 Introduction..................................................................................................................xx
1.12 The Evolution of Social Welfare..................................................................................xx
1.13 Social welfare policies..............................................................................................xxiii
1.14 Programmes in various welfare states.......................................................................xxiv
1.15 History of Social Welfare in Kenya.........................................................................xxvii
v

The Legal Framework Relating to Social Welfare for the Kenyan Retired Worker..........xxviii
1.16 Introduction.............................................................................................................xxviii
1.17 The Constitution of Kenya 2010...............................................................................xxix
1.18 Employment Act CAP 226 Laws of Kenya..............................................................xxix
1.19 Pensions Act Cap 189.................................................................................................xxx
1.20 The Retirement Benefits Authority Act CAP 197....................................................xxxi
1.21 The National Social Security Fund Act CAP 258 Laws of Kenya..........................xxxii
1.22 The National Social Security Fund Act 2013..........................................................xxxii
1.23 The National Hospital Insurance Fund Act 1998....................................................xxxvi
1.24 Equality of Treatment (Social Security) Convention, 1962...................................xxxvii
1.25 Invalidity, Old-Age and Survivors' Benefits Convention, 1967...........................xxxviii
1.26 Maintenance of Social Security Rights Convention, 1982.....................................xxxix
1.27 Social Security (Minimum Standards) Convention, 1952......................................xxxix
1.28 Domestic Workers Convention, 2011.....................................................................xxxix
Comparative Study: Retirement Systems of Kenya and Australia...........................................xl
1.29 Introduction...................................................................................................................xl
1.30 The Australian Retirement Model................................................................................xli
1.31 The Contributions of New Zealand towards Comfortable Retirement.......................xlii
1.32 A comparison of the Kenyan and Australian retirement situation..............................xlii
1.33 Lessons and Conclusion.............................................................................................xliii
Summary, Recommendations and Conclusion......................................................................xliv
1.34 Summary....................................................................................................................xliv
1.35 Recommendations.......................................................................................................xlv
vi

Challenges Kenya may face in the implementation.....................................................xlviii
1.36 Conclusion..................................................................................................................xlix
Bibliography..............................................................................................................................li
Introduction to the Study
1.1 Introduction and Background to the problem
This dissertation consists of an analysis of the social welfare legislation in Kenya; zoning in
on its presence, applicability and effectiveness over retirees in Kenya. It further pinpoints the
gains thus far made and the possible improvements on the identified legislation when
contrasted with similar legislation and practice of the Australian jurisdiction.
An understanding of social welfare and its origins and the benefits of welfare is helpful in
understanding the need to consider Kenya’s position on the matter. Also, it gives justification
for the fronting of the provision of welfare by the state to the retired as a solution to problems
that will be established to be facing them.
Thus, social welfare is the provision of a minimum standard of living among the citizens of a
nation. As it is plays a part in the protection of citizens, it is mainly the function and duty of
the State. It however is also provided by non-governmental organizations, religious groups,
social groups, etc. The services offered include universal healthcare and one form or the other
of unemployment insurance.
The concept of social welfare can be said to have been practised in the Roman Empire under
the emperor, Augustus, who provided a meal of corn to the poorer citizens of the empire1
.
1
“Britannica Encyclopedia,” accessed January 27, 2014, www.britannica.com.
vii

Around 1000AD, the Song Dynasty government in China supported programs such as the
establishment of retirement homes, public clinics, and paupers' graveyards. These acts and
the groups of persons it targeted have seen these categorized as early signs of social welfare
by the state. The English Poor Law of 1601, which gave parishes the responsibility for
providing welfare payments to the poor and the 19th
century Poor Law Amendment Act,
introducing the system of workhouses were the initial shows of social welfare in England.
Under Islamic practice, there is the concept of zakat which is a charitable contribution made
by the able. It is one of the Five Pillars of Islam and has been collected by the government of
Muslim states since the time of the Rashidun Caliph Umar in the 7th century. The taxes were
used to provide income for the needy, including the poor, elderly, orphans, widows, and the
disabled2
.
It can be seen that social welfare becomes relevant when it applies to special needy groups in
society. Retired persons can be seen to fall under this category for two reasons; their
unemployment as well as them being elderly. Persons at and beyond the point of retirement
are met by various challenges as they attempt to sustain their prevailing way of life into their
retirement. This often involves challenges at the various levels of human living including
mentally, emotionally, spiritually and quite significantly; economically and socially.
As stated, social welfare or social security as a concept involves the protection of the basic
needs of individual citizens within a society, allowing them to maintain a minimum standard
of living within that society. With the majority of Kenyans living within poverty levels, and
unable to acquire for themselves the requirements of everyday such as three square meals,
healthcare and education; social welfare provision by the state becomes a common concern,
hoping for it as a form of sustenance or at least relief.
2
Shadi Hamid, “An Islamic Alternative? Equality, and Redistributive Justice, and the Welfare State in the
Caliphate of Umar,” Renaissance: Monthly Islamic Journal no. 13(8) (August 2003).
viii

The problem of unemployment among the youth has been widely considered. This remains an
important matter to consider. However, if the number of adults who are not in employment
due to various reasons were to be considered, the worry of unemployment may quickly divert
its attentions. For instance, in 2014 an estimated 20,000 people will retire from the civil
service3
. When numbers of the estimated retired from the private sector are put into play as
well as the surviving retired from past years, the number of retired can be said to be of greater
worrying significance.
This is because; almost all Kenyan adults aged 35 and above have from one to hundreds of
persons who look upon them to provide for their various needs. Therefore, although the youth
do undoubtedly hold the future, this future is supported by the quality of the foundation
offered to the youth. The youth are thus evidently dependent on the standards accessible to
their parents and guardians. This becomes even more increasingly true due to the increasing
age levels of dependents occasioned by youth unemployment, and in turn the increase in age
of those being depended upon. This vicious cycle may therefore require nipping the bud, that
is, a look at the foundation the youth are receiving from parents and guardians supporting
them on mostly insufficient pensions for example. Kenya is said to face extreme levels of old
age poverty in the next 20 years as the number of people above 60 years doubles with no
corresponding increase in pension coverage4
Having considered this, the relatively low retirement age in Kenya is of significance. The
retirement age for many years stood at 55 years of age. Effective April 1 20095
, it was pushed
up to 60 years. This however is still a level to be put up for debate. Since the retirement age
will evidently be maintained as relatively low as it is, it will thus not be the concentration of
3
JEVANS NYABIAGE, “State’s Pension Bill Balloons with 20,000 New Retirees,” Standard Newspaper, June
26, 2013.
4
Steve Mbogo, “Millions Faced With Poverty Trap Upon Retirement.,” Business Daily, April 13, 2009.
5
Monica Were, “THE CONCEPT OF RETIREMENT AGE: A COMMENTARY” (Research & Development
Department, RBA.
ix

this research. Instead, the prevalent plight of retired Kenyan workers shall be looked into.
Identifying this, as well as the developments that may have been made under Kenyan law so
as to address the issues, may enable the identification of remaining gaps in legislation. Since
employment laws may not be adequately directed to retirement so as to be relevant or
effective enough, a look especially into social welfare legislation could be a way out for
them.
There are various statutes relating to the provision of social welfare. These include; the
National Health Insurance Fund Act, the National Social Security Fund Act, the Pensions
Act, the Retirement Benefits Authority Act, and even a consideration of tax reliefs under
Kenya’s tax legislation. The Constitution of Kenya 2012 for instance caters for social welfare
under article 43, providing for minimum standards of healthcare, housing, education, food
and water and even states under art. 43(3) that the State shall provide appropriate social
security to persons who are unable to support themselves and their dependants’6
.Also,
international conventions on social security, redundancy, retirement and old age as adopted
by Kenya can be a tell-tale on the current vigour applied to the provision of needs to the
retired.
1.2 Statement of the Problem
The problem is that there seems to be a gap in legislation relating to retirees in Kenya. Global
standards have over the years have taken this group of persons to require special
consideration7
in terms of care due to being in the category of the elderly as well as the
unemployed, and thus afforded them certain rights and privileges.
Kenya however can be seen to be lagging behind in the adoption of such considerations. With
1.6 million Kenyans being aged 60 years and above and estimated to reach 3.4 million by
6
The Constitution of Kenya, 2010.
7
“ILO,” accessed December 2, 2013, www.ilo.org.
x

20308
; while pension coverage growth is merely 100,000 people per year and currently
standing at 3.8 million9
there is an apparent show of the on-going imbalance in the country.
This has left a large number of Kenyans who enter into retirement languishing in poverty and
unable to sufficiently sustain not only their needs but also those of their dependents. For
instance, research of retired teachers under the Teachers Service Commission has shown that
such person’s standards of living have reduced greatly upon retirement due to insufficient
pensions and lack of adequate social welfare measures10
.
Legislation on social welfare includes the NHIF Act, the Retirement Benefits Authority Act,
the Constitution of Kenya 2010, and most recently the National Social Security Act 2013.
Although there has been numerous provisions to establish pension schemes, healthcare under
the above, legislation on its enforcement and that creates adequate standards is still wanting.
The level of inadequacy for instance can be seen by the repeal of the National Social Security
Fund Act in favour of the NSSF Act 2013. This was necessary to establish a viable pension
scheme under the Fund11
. NSSF’s offering of Sh80, 000, as lump sum payment upon
retirement is insufficient for the prevailing cost of living. The new bill includes provisions
such as a 6% compulsory contribution from both the employee and the employer12
. This is in
contrast to the previous standard amount of 200 Kenya Shillings.
The state cannot turn a blind eye as this scenario is increasingly duplicated all around the
country. The state thus may need, based on its mandate in the protection of its citizens, to
provide social security to the retiree. More importantly may be, if the need is established, the
extent to which the state is responsible in order to establish a minimum standard for these
8
“UN,” accessed April 6, 2014, www.un.org. United Nations Department of Economic Social and Cultural
Affairs
9
“Retirement Benefits Authority,” accessed January 7th, 2014, http://www. rba.go.ke.
10
Ciriaka Tirindi Kithinji, “Aging and Retirement in Kenya; Focus on Aging and Retired Teachers Under the
Teachers Service Commission (TSC),” http://ir-library.ku.ac.ke/handle/123456789/4864/.
11
“Business Daily Africa,” accessed November 30, 2013, http://www.businessdailyafrica.com.
12
“Citizen TV News,” December 5, 2013, www.citizennews.co.ke/.
xi

citizens. Thus the question becomes to what extent a retiree can lay claim under law as to
their entitlement to provision of certain services for maintenance of their basic needs or, at
the minimum, a subsidy to such services.
1.3 Justification of the Study
This study is justified on the basis that there appears to be a gap in labour legislation.
Legislation dealing exclusively with the state’s role in provision of basic social amenities at
the point whereby employment is no longer possible due to attainment of a specified
retirement age cannot be easily pinpointed. As it has been stated, retirement majorly affects a
person both socially and economically. Due to this, retirement falls under socio-economic
matters in a society.
Although statistics show that there are a substantial number of the Kenyan workforce being
retired annually, and thus a large percentage of the Kenyan population consists of retirees and
their dependents, there has not been much national discussion into the role to be played by
these citizens nor as to the role the state must then take up in order to ensure that a chunk of
its population does not delve into poverty, ill health and sometimes inevitably, unwarranted
early demise13
.
This research is also backed by both the Millennium Development Goals, one being the
global eradication of poverty14
as well as Kenya’s Vision 2030 which backs a similar mission
and additionally considers the importance of establishing an effective system of social
security15
within the country. These two make considerations for special groups in society
thus provide a basis for a look into the provision of minimum living conditions for the retired.
13
R.H. Haveman, Poverty: Measurement and Analysis: International Encyclopedia of the Social & Behavioral
Sciences, 2001.
14
“UN Millenium Goals,” UN, November 20, 2013, www.un.org/millenniumgoals.
15
“Kenya’s Vision 2030,” November 20, 2013, www.vision2030.go.ke.
xii

Analysis and recommendations concerning this socio-economic aspect and consequently its
scope under socio-economic laws governing it, is thus necessary in the establishment of the
best way forward in attaining assistance for this significant group of persons in our society.
1.4 Research questions
1. What is social security?
2. What is retirement?
3. What are the major challenges faced by retirees? Do these challenges include the
retirement age itself?
4. What effects do these challenges have?
5. What is the purpose/aim of social security laws?
6. Have social security laws met their purpose?
7. What lessons can Kenya learn from the Australian laws on social security and retirement?
1.5 Research Methodology
The method I will be using for this research is mainly qualitative. This is because by doing a
mainly qualitative research, I will be able to effectively obtain the information I require for
my research while still meeting my research objectives within my research limitations. This
qualitative portion will be done by selecting secondary sources of information that are
relevant to my research; reading them, analysing and editing it into useful material capable
of answering the research questions raised by my area of interest. These secondary materials
may include scholarly books, journals, the internet and articles, e-books or e-journals
contained in it.
xiii

In order to allow for deeper and current insight into my area of research, I will supplement
the above secondary materials with a few primary sources of information on my research area
where possible. These sources may include an interview with a person competent and
experienced in dealing in a social security provision organization. This interview may be
carried out by asking questions from a questionnaire that I may prepare. This will allow me to
get the general mind-set of persons actually involved in the provision and administration of
national social welfare and in particular the extent to which they give specialized
consideration to their retired clientele.
Also, I may conduct a focus group of my peers in the University Of Nairobi School Of Law
and/or other youth who are currently dependents on persons who are retired. This can help
me determine the concerns of retirees that stem not only from themselves, but also from their
dependents, and thus the effect of retirement on the Kenyan society as a whole.
1.6 Objectives of the Study
By carrying out this research, I intend to create greater awareness for the rising commonness
of problematic living situations faced by numerous households due to a breadwinner attaining
the retirement age, and thus no longer being catered for by the earnings and allowances
formerly accruing due to their employment.
Having established a problem, an objective of this research would then be to establish the
need for state intervention in the eradication or at least the minimization of these problems16
.
This can be enhanced by coming up with recommendations of possible inputs of statutory and
practical assistance that can be introduced which targets the retired in Kenya.
1.7 Limitations/Scope of the study
16
“Funding Social Services: A Historical Analysis of Responsibility” (Victoria University Press, November 9,
2013), www.victoria.ac.nz.
xiv

The scope of this study in terms of geographical consideration will be limited mainly to
Kenya. This is because the laws that largely impact my immediate society, which I thus wish
to improve, are Kenyan laws. In order to identify some of the possible gaps in Kenyan law
however, I seek to consider the laws of another jurisdiction that has previously considered a
system to aide their retirees live a relatively comfortable retirement17
. For this reason I will
also consider the relevant portion of the retirement and social welfare legislation and practice
found within Australia.
The lack of willingness of interviewees; including retired persons, social security
professionals and focus group participants, to answer questions or answering inaccurately.
This will hinder the accuracy of the research in establishing the current positions on the
issues being researched.
Having experienced directly the challenges faced by retirement of a breadwinner within the
household, the research may (due to this researcher) to some extent subconsciously be biased
towards the view that there always arise challenges due to retirement. This view overrides the
stance that is sometimes argued that where there is adequate preparation by the retiree for
retirement, standards of living whether mental, emotional, or even financial need not change.
Coming from my inherent standpoint due to personal experiences however, the research may
in some instances unintentionally show a pre-emption of the need for review of policy
consideration and changes regarding the handling of retirement in the country.
1.8 Hypothesis and assumptions
 Retirement is mainly seen as a phenomenon that brings with it negative consequences
especially economically
17
Catherine Baab-Muguira, “Want a Comfortable Retirement? Move to Australia,” AOL.com (May 3, 2013).
xv

 Social welfare has not been well established in Kenyan society to be group-specific18
,
including retired persons’ needs
 The establishment of effective social welfare mechanisms by the state would eliminate a
large chunk of problems facing retirees19
 A look at the Australian jurisdiction on their approach in caring for the retired could give
insight20
on the gaps within the Kenyan situation on the same and thus could give
substantial recommendations for Kenya
 The retirement age of 60 years stipulated by law for most formal sector jobs is low21
, and
its increase could better work to improve the retirement situation currently seen.
1.9 Theoretical framework
The theoretical framework to be used for this research will be the theory of social justice.
This theory has been propounded by John Rawls and David Miller. It proposes that every
person in society shares a common humanity and thus has a right to equitable treatment,
support for their human rights, and a fair allocation of community resources22
. It advocates
that there should be neither discrimination nor restraint of one’s welfare and well-being on
the basis of gender, religion, political affiliations or even race or age23
.
The theory of social justice is relevant to this research as it not only calls for equality but also
insists on the need to give care to the least advantaged members of society. This theory can
consequently be seen to be a basis for the establishment of social security systems, as well as
18
“The NSSF Bill 2013: Contents and Policy Issues” (Institute of Economic Affairs, October 29, 2013).
19
“A Brief History of Health and Care Funding Reform in England” (Socialist Health Association, 2013).
20
Baab-Muguira, “Want a Comfortable Retirement? Move to Australia.”
21
Were, “THE CONCEPT OF RETIREMENT AGE: A COMMENTARY.”
22
Matthew Robinson PhD., “PhD What Is Social Justice?,”
23
Matthew Clayton and Andrew Williams, Social Justice (Wiley, 2004).
xvi

for the identification of special needs groups in any given society such as the category of the
elderly retired.
In addition the theory of social contract will be tied in with that of social justice. This theory
propounded by Jean-Jacques Rousseau, Hugo Grotius, Immanuel Kant among others. It
proposes that persons in society surrender their power to a sovereign in exchange of
protection from that sovereign for the entire society24
.
This theory is relevant to the research as it establishes that the authority that a state has is
only due to it being given such by the people it governs. Also, that this authority is to be used
for the benefit and protection of its citizens. This theory can thus be seen as the basis for the
establishment of the concept of social security and social welfare.
The theory of equity supports the distribution of a country’s resources among all the people
in a way that gives consideration to any special circumstances of individuals.
The natural law theory is based on the use of moral principles to determine the law25
. This
theory is beneficial to the research as it encourages standpoints of humanity and the moral
consciousness of society to provide for those who are less able such as the elderly.
The special interests group theory justifies the categorization and assistance of special
groups in society. This will be necessary to show that retired persons and their predicament
should be looked at so as to establish ways to prevent the problems and aide them to continue
living comfortably in society.
1.10 Literature Review
24
Anthony A. D’Amato, Jurisprudence: A Descriptive and Normative Analysis of Law (Martinus Njihoff,
1984).
25
Anthony A. D’Amato, Jurisprudence: A Descriptive and Normative Analysis of Law (Martinus Njihoff,
1984).
xvii

Kenyan statutes to be used to collect data for this research include the NHIF Act, the NSSF
Act, the Pensions Act, and the Retirement Benefits Authority Act. These statutes contain
the position that has been taken in Kenya by the state as to the extent to which it will
intervene in the provision of social services to its citizens. Repealed statutes contrasted to the
current statutes allow a show of the gaps have been plaguing the success of social welfare in
Kenya.
Especially useful for this research, analysis of the aforementioned will allow for the
determination of whether social welfare legislation identifies specific groups of persons in
society with special needs. Identifying for instance whether retirees have been given any
special mention or consideration will be made possible by a review of the various statutes.
International conventions on social security, redundancy, retirement and old age to which
Kenya is a party, or otherwise, will establish the global standards desired for the world’s
citizens, and in particular for the retired. This will enable the gauging of where Kenya
currently stands and the direction it needs to take as it seeks to develop in the area of social
security.
Tolley’s Employment Handbook 19th
Edition by Elizabeth Slade QC (Oxon) Barrister and
specifically chapter 41 that covers retirement will be used to give a deeper understanding to
the concept of retirement. It brings up the issue of retirement age and employment protection,
early retirement and benefits after retirement as well as introduces pensions. It also does an
analysis of the Employment Equality (Age) Regulations 2006. This will provide a foundation
to the concept of social security to the retired. Elizabeth Slade debates the issue of whether
retirees face a type of employment discrimination that will form a firm basis as to the real
plight of the retired.
xviii

Employment Law by Gwyneth Pitt covers the area of retirement and age discrimination. It
further discusses various issues arising at retirement. This will serve this research by
questioning considerations as to whether retirees need to be catered for by their governments
in a specialized way to curb some of the issues shown to be faced universally. Aspects of
social welfare covered in this text aide in the establishment of the prevailing global social
standards for the elderly.
Learned Helplessness after Retirement: The Case of Rural Retirees In Kihumbui-ni
Location, Murang'a County, Kenya: Wachira, Miriam Wanjiku (2012) is a research carried
out by a University of Nairobi. This research will assist in establishing that there is actually a
problem among retirees that requires redress. Specifically it establishes the ambiguity of the
role of the retired in Kenyan society. The author establishes a case for the low level of the
retirement age in Kenya and the need to establish alternate uses for the knowledge and skills
of experienced retired persons.
Role of social protection on nutritional status of elderly persons: the case of Imenti
north district, Kenya Mwenda, M K is also a research by a University of Nairobi student. It
brings up the issue of social protection and its necessity due to it being the major viable
solution to the problems of persons above 60 years. The author brings out the troubles
reflected across Kenya that go beyond public administration issues and delve into the
situation facing retirees at a personal level. The author further proposes measures that can be
taken to eliminate these trials, and is relevant to this research as it establishes the benefit of
state-provided social welfare in the improvement of standards of living for these persons.
xix

Historical Development of Social Welfare
1.11 Introduction
In order to establish a case for the establishment, restructuring or enforcement of social
welfare in Kenya, it is essential to establish the history behind the evolution of the concept of
social welfare. The historical development will answer questions arising such as:
- What brought about the need for social welfare?
- To who in the society was social welfare targeted?
- What models of social welfare were established and adopted in the various founding
states?
- Did the establishment of social welfare aide in solving the problems sought to be
addressed by its introduction?
1.12 The Evolution of Social Welfare
Social welfare arose logically, if not spontaneously, from the very nature of modern society.
Whatever its local variations, modernity everywhere involves urbanization, industrialization,
and loss of family and local community economic support. Workers are consequently
exposed to a variety of hazards (most notably illness, unemployment or injury on the job);
previously perceived as family and community responsibilities26
. In the same vein, the life
phases before and after market employment, that is youth and old age, also require
protections as substitutes for the family/community goods and services available in simpler
times.
26
Elna C. Green, Before the New Deal: Social Welfare in the South, 1830-1930 (University of Georgia Press,
1999).
xx

This however is not simply a phenomenon found in modern times. Social welfare can be
pointed out from aeons ago, taking various forms in the different eras and localities. In the
Roman Empire for instance, the first emperor Augustus provided the 'congiaria' or corn dole
for citizens who could not afford to buy food27
. Social welfare was subsequently enlarged by
the Emperor Trajan. Trajan's program brought acclaim from many, including Pliny the
Younger.
In the Eastern hemisphere, the Song dynasty government (c.1000AD in China) supported
multiple programs which could be classified as social welfare, including the establishment of
retirement homes, public clinics, and paupers' graveyards.
Religious groups, based on their founding principles of morality and compassion, have
played a massive role all through in providing for the needy groups in society. The medieval
Roman Catholic Church for instance operated a far-reaching and comprehensive welfare
system for the poor.
Early welfare programs in Europe included the English Poor Law of 1601, which gave
parishes the responsibility for providing welfare payments to the poor. This system was
substantially modified by the 19th-century Poor Law Amendment Act. The new legislation
introduced the system of workhouses28
.
Generally speaking, before the Great Depression, most social services were provided by
religious charities and other private groups. Changing government policy between the 1930s
and 1960s saw the emergence of a welfare state, similar to many Western European
countries. Most programs from that era are still in use, although many were scaled back
during the 1990s as government priorities shifted towards reducing debt and deficits29
.
27
Richard Duncan-Jones, Money and Government in the Roman Empire (Cambridge University Press, 1998).
28
“A Brief History of Health and Care Funding Reform in England.”
29
The Economist, “Capitalism and Its Critics,” May 2014.
xxi

It was predominantly in the late 19th and early 20th centuries however that an organized
system of state welfare provision was introduced in many countries30
. The World Wars had
evolved states into more responsible global actors whose citizens were at the core of their
sovereignty31
. Social and economic rights therefore became not just an option by national
bodies but rather an international obligation of states as under the 1948 United Nations
Declaration of Human Rights32
.
Developments thus were seen to spring up across the nations. Otto von Bismarck, Chancellor
of Germany, introduced one of the first welfare systems for the working classes. In Great
Britain the Liberal government of Henry Campbell-Bannerman and David Lloyd George
introduced the National Insurance system in 1911, a system later expanded by Clement
Attlee. These can also be seen to be the initial steps towards employee rights that were quite
necessary due to industrialization.
The United States inherited England's poor house laws and has had a form of welfare since
before it won its independence. During the Great Depression, when emergency relief
measures were introduced under President Franklin D. Roosevelt, Roosevelt's New Deal33
focused predominantly on a program of providing work and stimulating the economy through
public spending on projects, rather than on cash payment.
In the Islamic world, Zakat (charity), one of the Five Pillars of Islam, has been collected by
the government since the 7th century. The taxes were used to provide income for the needy,
including the poor, elderly, orphans, widows, and the disabled. According to the Islamic jurist
Al-Ghazali, the government was also expected to store up food supplies in every region in
case a disaster or famine occurred34
.
30
Green, Before the New Deal: Social Welfare in the South, 1830-1930.
31
Clayton and Williams, Social Justice.
32
“UN.”
33
Green, Before the New Deal: Social Welfare in the South, 1830-1930.
34
Patricia Crone, “Medieval Islamic Political Thought,” Edinburgh University Press (2005): 308.
xxii

Welfare can take a variety of forms, such as monetary payments, subsidies and vouchers, or
housing assistance. Welfare systems differ from country to country, but welfare is commonly
provided to individuals who are unemployed, those with illness or disability, the elderly,
those with dependent children, and veterans. Retired persons thus fall in these special needs
groups to whom the evolution of welfare can be said to have been necessitated.
There is however need for constrain in the eligibility of persons so as to benefit those who
actually require it rather than simply opt for it over other more viable sources of income.
Welfare is seen to be provided by governments or their agencies, by private organizations, or
a combination of both. Funding for welfare usually comes from general government revenue,
but when dealing with charities or NGOs, donations may be used. It is however important for
state parties to provide this to needy citizens across the board in line with its responsibilities
under the theories of social contract and social justice.
1.13 Social welfare policies
As already pointed out, social welfare refers to publicly financed and administered programs
designed to meet basic needs inadequately met through the market system35
. Social welfare
policies are thus the laws which when administered determine the standards of welfare for the
various groups of citizens. They are important in distinguishing the nature of different states,
and hence the classification of whether a state is a welfare state or not. These policies are the
creation and adaptation of various state organs and processes including legislative, political,
administrative and even judicial.
The legislature plays a major role in establishing the standard of welfare in the country.
Legislators being both law-making as well as political in nature36
, and socio-economic rights
being greatly influential of the election of these law-makers by the citizens, the policies
35
“SOCIAL WELFARE POLICY,” Michigan State University pg. 11
36
“SOCIAL WELFARE POLICY. Michigan State University”
xxiii

manifested reflect economic reasoning as well as social interests tailored to the contemporary
societal needs.
The application of these policies required there to be established criteria by which persons
were eligible to benefit from these programs. The criteria that has been widely accepted and
practised is the use of citizenship firstly, then contributions and lastly the “means” test.
Welfare benefits are awarded by the state mainly to the citizens of that state as it is charged
with the responsibility of ensuring a minimum quality of life for the persons under its care
and protection. Thus retired citizens of a country by mere citizenship have a claim to welfare
made available to the public at large.
Other than that, persons may claim welfare from the state on the basis that they made
contributions towards such benefits. This usual constitutes the bulk of welfare in a country. It
entails an employee and/or an employer making payments towards a fund to be used in case
of unemployment or old age.
Eligibility via the “means” test is established by demonstrating need according to
government-mandated criteria37
.
1.14 Programmes in various welfare states
In the United States the term welfare may either refer to means-tested cash benefits,
especially the Aid to Families with Dependent Children (AFDC) programme and its
successor, the Temporary Assistance for Needy Families Block Grant, or it can be used to
refer to all programs, including, for example, healthcare through Medicaid, Obamacare and
food and nutrition programs (SNAP)38
.
37
“Britannica Encyclopedia.”
38
Katz, Michael B. (1988). In the Shadow of the Poorhouse: A Social History of Welfare in America. New
York: Basic Books
xxiv

AFDC was created during the Great Depression to alleviate the burden of poverty of families
with children and allow widowed mothers to maintain their households. Prior to this, anti-
poverty programs were primarily operated by private charities or state or local governments;
however, these programs were overwhelmed by the extent of need during the Depression.
Alimony is still a practice of a few states including New Jersey, Florida and Oregon which
entails the provision of welfare for one by another.
In Canada, welfare usually refers specifically to direct payments to poor individuals (as in
the American usage) and not to healthcare and education spending (as in the European
usage)39
.The Canadian social safety net covers a broad spectrum of mainly province-run
programs, due to it being a federation. Canada has a wide range of government transfer
payments to individuals, which totalled $145 billion in 200640
. Only social programmes that
direct funds to individuals are included in that cost. Other programmes including Medicare
and public education are additional as they are provided generally to its citizens. The State
can thus be seen to have given great attention to provision of welfare to its citizens.
Social welfare in Sweden is made up of several organizations and systems dealing with
welfare. Funding is done by taxes, and executed by the public sector on all levels of
government complimented by private organisations. It can be separated into three parts
falling under three different ministries: social welfare, falling under the responsibility of
Ministry of Health and Social Affairs; education, under the responsibility of the Ministry of
Education and Research and labour market, under the responsibility of Ministry of
Employment41
. Government pension payments are financed through an 18.5% pension tax on
all taxed incomes in the country, which comes partly from a tax category called a public
pension fee (7% on gross income), and 30% of a tax category called employer fees on
39
Parl.gc.ca
40
Government transfer payments to persons, Statistics Canada
41
“Sweden Government,” accessed April 30, 2014, http://www.government.se.
xxv

salaries (which is 33% on a netted income). Since January 2001 the 18.5% is divided in two
parts: 16% goes to current payments, and 2.5% goes into individual retirement accounts,
which were introduced in 200142
. Money saved and invested in government funds, and IRAs
for future pension costs, are roughly 5 times annual government pension expenses. The
Swedish system is elaborate but ensures low cost in the administration of pensions and
welfare.
New Zealand is often regarded as having one of the first comprehensive welfare systems in
the world. During the 1890s a Liberal government adopted many social programmes to help
the poor who had suffered from a long economic depression in the 1880s. One of the most far
reaching was the passing of tax legislation that made it difficult for wealthy sheep farmers to
hold onto their large land holdings. This and the invention of refrigeration led to a farming
revolution where many sheep farms were broken up and sold to become smaller dairy farms.
This enabled thousands of new farmers to buy land and develop a new and vigorous industry
that has become the backbone of New Zealand's economy to this day43
. This liberal tradition
flourished with increased enfranchisement for indigenous Maori in the 1880s and women.
Pensions for the elderly, the poor and war casualties followed, with State run schools,
hospitals and subsidized medical and dental care. By 1960 New Zealand was able to afford
one of the best-developed and most comprehensive welfare systems in the world, supported
by a well-developed and stable economy44
.
The United Kingdom has a long history of welfare, notably including the English Poor laws
which date back to 153645
. After various reforms to the program, which involved
workhouses, it was eventually abolished and replaced with a modern system by laws such as
42
“ILO.”
43
The Economist, “Capitalism and Its Critics.”
44
Ross Guest Professor of Economics Griffith University, “COMPARISON OF THE NEW ZEALAND AND
AUSTRALIAN RETIREMENT INCOME SYSTEMS” (Commission for Financial Literacy and Retirement
Income, February 2013).
45
“A Brief History of Health and Care Funding Reform in England.”
xxvi

National Assistance Act 194846
. The welfare system comprises expenditure by the UK
government on health, education, employment and social security.
The system has been successful as it has seen the nationalization of essential services rather
than the costly and gruesome task of establishing state facilities from the ground up. This can
be seen for instance through the National Health Service that is state-owned and is accessible
to all persons across the United Kingdom47
.
1.15 History of Social Welfare in Kenya
Kenyan retirees, just like retirees globally face a number of problems. These include risks
such as sudden loss of life, loss of the usually anticipated regular salary, anxiety about
housing, dwindling status, decreased strength and deteriorated health, physical disabilities
and aging48
. To curb these problems, the state has been charged under the Constitution to
protect its citizens I any lawful manner possible. Social welfare has arisen globally as a
means to doing so.
Kenya’s development in relation to public social welfare is attributable to the introduction of
various legislations. However, the fact cannot be ignored that customs of the various Kenyan
communities had practices reflective of global and modern social welfare. For instance,
harvests were stored in bountiful times and these distributed on command of the council of
elders or monarchy to persons across the kingdom that drought or floods had left hungry49
.
Also, the elderly and young were cared for by the able-bodied who would ensure the needs of
the entire community were maintained.
46
“WBG Website,” World Bank Group, accessed April 14, 2014,
http://siteresources.worldbank.org/WBI/Resources/wbi37202.pdf.
47
“About the NHS” (United Kingdom Department of Health, June 2012).
48
Theresa Onyinye, “Problems and Prospects of Retirement Adjustment on Families of Retirees Among Civil
Servants in Ekiti State, Nigeria” (University of Ado-Ekiti, 2011).
49
“Rights of Indigenous Peoples: Kenya - Kenya Draft ILO Study Database,” accessed April 16, 2014,
www.chr.up.ac.za.
xxvii

Religious groups, from the age of missionary conversion to modern churches, temples and
synagogues have practised charitable acts and established charitable institutions whose ends
have become reliable as welfare to many. In addition, private steeps by private sector
stakeholders through CSR, as well as NGOs, have been the sources of major welfare
measures for the different needs groups within Kenyan society.
In the 1990s Kenya saw the advent of various legislations on social welfare including the
National Social Security Act that brought the concept of contributions of the employed
towards a pension, the National Hospital Fund that allows persons to contribute toward
insurance for medical services, the Pensions Act that regulated management of pension
schemes. Other contemporary forms of social welfare include programmes such as the free
primary education system introduced in 2003. These form the state-provided forms of social
welfare in Kenya.
The Legal Framework Relating to Social
Welfare for the Kenyan Retired Worker
1.16 Introduction
Various provisions found under different Kenyan statutes have contributed to developments
in the state of social welfare policy in Kenya. Below is outlined such provisions and the
relevant legislation availing social welfare upon retirement.
xxviii

1.17 The Constitution of Kenya 2010
Welfare being a socio-economic right, it is provided for by Chapter V of the Constitution.
Under article 43(1), the rights to the highest attainable standard of health, housing, freedom
from hunger, clean and safe water, education and social security is awarded to every citizen.
These make up the claims thus that retirees may make in the pursuit of a decent quality of
life. The State charges itself with the responsibility of providing appropriate social security to
those unable to support themselves and their dependants50
.
Through the labour relations rights under article 41 and further under the Labour Relations
Act No 14 of 2007, in the course of employment a worker may negotiate for fairer pension
terms as well as other retirement benefits via collective bargaining agreements by
involvement of trade unions and employers’ organisations.
1.18 Employment Act CAP 226 Laws of Kenya
In considering the framework for provision of social welfare in retirement, it is essential to
consider that the course of the employment is relevant in establishing the systems put in place
for determination of benefits that are to accrue at retirement. The Employment Act details
forms of employment and thus types of employees, minimum terms of the contract of service,
and consequently considerations for retirement under the different circumstances of
employment.
A written contract of service51
is required to contain terms and conditions relating to pensions
and pension schemes52
. This establishes an obligation for an employer to provide for the
pension of the employee from the initial stage of employment, and for the employee to accept
or refuse these alongside other terms of service laid out in the contract. Other than these
express terms being stated by the employer, where the pension rights to an employee of a
body or authority depend on the terms of a pension scheme established under any provision
contained in or having effect under any Act; the body or authority may be required to give to
50
The Constitution of Kenya art. 43(3).
51
A contract of service as provided for by Section 9(2) of the Employment Act is a written contract for service
for a period or a number of working days which amount in the aggregate to the equivalent, of three months or
more; or which provides for the performance of any specified work which could not reasonably be expected to
be completed within a period or a number of working days amounting in the aggregate to the equivalent of three
months
52
Employment Act CAP 226 Laws of Kenya s. 10(3)(a)(iii)
xxix

a new employee information concerning the employee’s pension rights or the determination
of questions affecting those rights as stipulated in such a statute.
1.19 Pensions Act Cap 189
An Act of Parliament to provide for the grant and regulating of pensions, gratuities and other
allowances in respect of the public service of officers under the Government of Kenya.
ss. 4 on the Benefits charged on Consolidated Fund states that all pensions, gratuities or
other allowances granted under this Act shall be a charge on the Consolidated Fund.
ss. 5 on pension as of right states, “Every officer shall have an absolute right to pension and
gratuity and the right conferred shall not apply in respect of compensation for past services,
nor shall anything in this Act affect the right of the Government to dismiss any officer at any
time and without compensation. However Where an officer has completed five years of
pensionable service, the benefits accruing to the officer under this Act shall vest in that
officer and shall become payable in such manner and at such times as may be determined
under this Act.
ss. 10 on Minimum and maximum pensions provides A pension granted to an officer under
this Act shall not be less than two thousand shillings or such other amount as may be
specified by the President from time to time, but shall not exceed the full pensionable
emoluments drawn by the officer at the time of his retirement.
ss.10A on the Deferment of pension states that Where an officer retires from the public
service before attaining the age of fifty years, the payment of the pension benefits granted at
the time of retirement shall be deferred until such officer attains the age of fifty years, except
in the following cases— where the officer retires before completion of ten years of service;
where an officer retires because of medical incapability; or where there are dependants upon
the officer’s death53
; The pension payable where any deferment of payment arises shall be
estimated based on projected pensionable emoluments from the date of retirement until the
officer attains the age of fifty years, according to such procedures as may be specified in
regulations.
53
Ss. 19A-Payment of dependant’s pension shall be done within a period of ninety (90) days after the death of
the officer concerned, failing which interest shall accrue thereon at bank rates until payment is made in full:
Provided that no interest shall be payable under this section where the failure to pay is occasioned by legal
proceedings in respect of payment.
xxx

Suspension of pension on re-employment under ss. 12 provides that where an officer to
whom a pension has been granted under this Act is appointed to another office in the public
service, the payment of his pension, or any part thereof, may, with his consent, if the
President thinks fit, be suspended during the period of his re-employment.
1.20 The Retirement Benefits Authority Act CAP 197
This Act establishes and governs the Retirement Benefits Authority. The authority is
mandated to regulate retirement benefits schemes. Its establishment was necessary so as to
protect the investments Kenyans make for their sustenance after retirement. Its mission thus
is to not only safeguard and supervise, but also to develop the Kenyan retirement benefits
sector through commitment to continued excellence in service delivery54
.
The object and functions of the Authority are the regulation and supervision of the
establishment and management of retirement benefits schemes, protection of the interests of
members and sponsors of the retirement benefits sector, promotion of the development of the
retirement benefits sector, and to advise the Minister on the national policy to be followed
with regard to retirement benefits schemes and to implement all Government policies relating
thereto55
.
In order to emphasize the weight of the Authority’s duty to safeguard retirement benefits,
section 15 provides that the Act shall not relieve the Authority of the liability to pay
compensation or damages to any person for any injury to him, his property or any of his
interest caused by the exercise of any power conferred by the Act or any other written law or
by the failure, whether wholly or partially, of any works.
Article 37 provides that schemes are to invest the capital contributed, maintaining the capital
and giving returns from those investments back to the beneficiaries. Schemes are thus not
only to be a store of these benefits but aspire to grow their beneficiaries’ savings. This is
important as these savings are susceptible to inflation and other economic factors that may
cause them to lose value over time.
54
“Retirement Benefits Authority”
55
Retirement Benefits Authority ActCAP 197, sec. 5.
xxxi

The Act has provided that it is mandatory for retirement benefits schemes, managers,
custodians and administrators to be registered by the Authority in order to run such schemes.
Registration of officers of these schemes is an assurance of the competency of such persons,
and that such persons can be held accountable in case of breach. The Authority thus has the
power to refuse registration for schemes and persons that do not qualify the requirements of
the Act.
In addition, the Authority has the powers to inspect schemes and appoint interim
administrators, to hear appeals, and file proceedings to recover deductions from employers.
Finally, the Act has provided punitive measures under section 53. It states that a person
commits an offence and shall be liable, on conviction, to a fine not exceeding one hundred
thousand shillings, or to imprisonment for a term not exceeding one year, or to both for any
offence under the Act.
1.21 The National Social Security Fund Act CAP 258 Laws of Kenya
By means of this Act the National Social Security Fund was established. The Fund has the
core function to have paid into it all contributions and other payments required by the Act and
secondly to ensure all benefits and other payments required by the Act be paid out of the
Fund to the contributors or their beneficiaries56
.
The reasons necessitating such a Fund include:
•Raising national savings
•Securing retirement for working population
•Old age poverty relief
•Savings and growth cycle57
This Act has now been repealed with the enactment of the 2013 NSSF Act to which greater
consideration will be given.
1.22 The National Social Security Fund Act 2013
56
The National Social Security Fund Act, LAWS OF KENYA, 1978.
57
“The NSSF Bill 2013: Contents and Policy Issues.”
xxxii

The National Social Security Fund Act CAP 258 as explained has governed the Kenyan
social security system for over 30 years. Due to the changing socio economic as well as
political dynamics of Kenya however, there has been a need for an overhaul of social security
legislation in Kenya. This has seen lengthy revision of the law. The NSSF Act 2013 can thus
be said to be a product of gradual evolution of the needs of Kenyans for a more reflective
social security system. The Kenyan National Social Security Fund Act 2013 was assented to
on 24 December 2013, and its date of commencement was 10 January 2014.
The Act had the task of fulfilling the following in order to successfully be a tool for reform in
the area of social security in Kenya:
• Replace predecessor established by CAP 258
• Provide policy to improve adequacy of benefits
• Include self-employed persons
• Provide full opt-out for employers at Tier II58
level59
• Increase membership coverage of the scheme;
• Improve adequacy of benefits paid out;
• Bring into the ambit of social security self-employed persons and their dependants;
• Operate and manage a value adding scheme by ensuring the funds are sustainable and
affordable and retaining the Old Provident Fund to avoid transferring old liabilities to
the new fund;
58
Tier II refers to persons with contributing to other registered pension schemes other than the NSSF
59
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• Ensure that the liabilities of the Old Provident Fund are settled within a period of 5
years from commencement
The above is thus the objectives of the Fund as outlined in the Act.
The Act provides that any person employed in Kenya and subject to the Employment Act
must contribute to the NSSF60
. This includes all public servants, including the military and
police, other than those exempted under any other statute. Every employer in Kenya must
also make contributions to the NSSF in respect of their employees. Existing members of the
NSSF, other than voluntary members, will thus become members of the new NSSF Fund.
The Act now provides that there shall be individuals exempted from contributing to the Fund
include:
i) Persons who are specifically exempt under any International Convention
ii) ii) Persons who are not ordinarily resident in Kenya and employed for periods not
exceeding 3 years at any one time and who contribute to a social security fund of
any country approved by the Cabinet Secretary61
The Act has increased the amount to be contributed for each employee. An employee is to
contribute at the rate of 6% of pensionable earnings while the employer is also to contribute
at the rate of 6% of the employee’s pensionable earnings in the form of an annuity or income
draw-down, bringing the total contribution rate to 12%. These mandatory contributions are
debited into the Pension Fund. These contributions may earn interest under the new
provisions.
60
National Social Security Fund Act, 2013.
61
“NSSF Act 2013” (Actuarial Services (E.A) Ltd, January 23, 2014).
xxxiv

Members who have been contributing to the Pension Fund will be entitled to receive benefits
based on their Pension Fund Credit upon62
:
a. their retirement at age 60
b. on early retirement from age 50
c. on retirement due to permanent incapacity
d. In the event of disability that results in a member being unable to earn a
reasonable livelihood.
The manner in which benefits become accessible under the Act is by buying an annuity from
a licensed insurer or being paid as an income draw down63
.A survivors benefit based on a
member's Pension Fund Credit plus a funeral grant of KES 10,000 will also be payable if a
member dies before accessing their benefits64
.
Some other succinct features are that a member emigrating permanently from Kenya may
also receive his benefit in the form of a cash lump sum. For those contributing voluntarily
into the Provident Fund on the other hand; they shall be entitled to receive as a cash lump
sum their Provident Fund Credit upon:
a. attaining the age of 50 years; or
b. if the member ceases to be self-employed;
c. or in the event of permanent incapacity or
62
National Social Security Fund Act.
63
An income draw-down is an arrangement where the benefit to a member is paid in the form of regular
amounts for example, on a monthly basis. The balance of the benefit that remains in the pension scheme
continues to accrue interest. However, the amount of the regular payment is not guaranteed and may be
increased or even reduced if investment returns of the pension scheme, amongst other factors, are significantly
differently from expected
64
xxxv

d. In the event of disability that renders the member unable to earn a reasonable
livelihood.
The 2013 Act can be seen to have incorporated considerations of the current economic
situation in the country. Although it has been argued that the rate of contribution is
detrimental to the quality of life of the worker in the course of their employment, there are
retired persons whose struggles in old age can testify to the need for such contributions that
could adequately impact their needs and vulnerabilities. Furthermore, in a situation where the
cost of living and hence the state’s economic health were comfortable, citizens would rather
maintain a similar quality of life both in employment and upon retirement at the cost of the
stipulated contributions.
1.23 The National Hospital Insurance Fund Act 1998
This Act establishes the National Hospital Insurance Fund. It is a scheme whose aim is the
access to healthcare for all through provision of insurance available in times of need of
medical attention. Persons thus contribute towards the Fund to this end.
There have arisen over the years numerous alternatives to this fund. Due to hurdles including
untimeliness of payouts by the Fund, numerous scandals such as of embezzlement, low
payouts, as well as political interference; Kenyans have lost faith in the Fund. However, the
Fund remains the most accessible to persons from all walks of life and with benefits of
membership including65
:
• NHIF provides an inpatient cover of up to Ksh. 396,000 per year for the
contributor, spouse and children.
• In comparison to private insurance schemes, the contributions are low and thus
accessible to many more Kenyans, both employed and unemployed
65
National Hospital Insurance Fund Act, 1998.
xxxvi

• Provides comprehensive medical cover in certain hospitals across the country.
• It works with a wide network of over 400 accredited Government, private and
mission health providers spread across the country.
• The Fund reimburses hospital claims as per agreed daily rebates.
• Covers maternity cases.
• NHIF does not exclude any disease
Notwithstanding, the Act is argued to be overdue for review to be able to cater for current
economic and medical considerations. The Act does not contain considerations of payouts for
non-contributing retirees. Amendment is thus further necessary for protection of vulnerable
groups such as the retired who would require medical care even more as they grow old and
reliant on social and state care.
1.24 Equality of Treatment (Social Security) Convention, 1962
In this Convention the term legislation includes any social security rules as well as laws and
regulations. The term benefits refer to all benefits, grants and pensions, including any
supplements or increments and the term benefits granted under transitional schemes means
either benefits granted to persons who have exceeded a prescribed age at the date when the
legislation applicable came into force, or benefits granted as a transitional measure in
consideration of events occurring or periods completed outside the present boundaries of the
territory of a Member. The term death grant means any lump sum payable in the event of
death.
The following branches of social security are to be obligated by the member states with
effective operation through legislation covering its own nationals within its own territory:
i. Medical care;
ii. Sickness benefit;
xxxvii

iii. Maternity benefit;
iv. Invalidity benefit;
v. Old-age benefit;
vi. Survivors benefit;
vii. Employment injury benefit;
viii. Unemployment benefit; and
ix. Family benefit
The provisions of this Convention apply to benefits granted under transitional schemes to be
found in the legislations passed by the member states, which shall communicate to the
Director-General of the International Labour Office through a statement indicating the
benefits provided for by its legislation.
1.25 Invalidity, Old-Age and Survivors' Benefits Convention, 1967
Part 3 of this convention covers old age benefits. Article 15 states that The contingency
covered shall be survival beyond a prescribed age and The prescribed age shall be not more
than 65 years or such higher age as may be fixed by the competent authority with due regard
to demographic, economic and social criteria, which shall be demonstrated statistically.
It also required that if the prescribed age is 65 years or higher, the age shall be lowered, under
prescribed conditions, in respect of persons who have been engaged in occupations that are
deemed by national legislation, for the purpose of old-age benefit, to be arduous or unhealthy.
Article 18 provides that the contingency shall be secured at least where the person has
completed, prior to the contingency and in accordance with prescribed rules, a qualifying
period which may be 30 years of contribution or employment, or 20 years of residence; or
where a prescribed qualifying period of contributions while he was of working age has been
paid.
xxxviii

1.26 Maintenance of Social Security Rights Convention, 1982
Article 6 provides that each Member shall endeavour to participate with every other Member
concerned in schemes for the maintenance of rights in course of acquisition, as regards each
branch of social security and for which every one of these Members has legislation in force,
for the benefit of persons who have been subject successively or alternately to the legislation
of the said Members.
Article 8 provides for the schemes for the maintenance of rights in course of acquisition
referred to in Article 6 of this Convention which shall determine the formula of awarding
invalidity, old-age and survivors’ benefits, and pensions, in respect of occupational diseases,
as well as the apportionment, where appropriate, of the costs involved.
Article 14 provides that each member state is to promote the development of social services
to assist persons covered by this Convention, particularly retirees, in their dealings with the
authorities, institutions and jurisdictions, particularly with respect to the award and receipt of
benefits to which they are entitled and the exercise of their right of appeal, as well as in order
to promote their personal and family welfare.
1.27 Social Security (Minimum Standards) Convention, 1952
This convention provides for the conditions set out for the security of the persons protected
under the provisions of benefits in respect of medical care, sickness benefit, unemployment
benefit, old-age benefit, employment injury benefit and any other benefits that may be
prescribed by the ILO or the member states.
1.28 Domestic Workers Convention, 2011
This convention being mindful to the commitment of the International Labour Organization
to promote decent work for all, through the achievement of the goals of the ILO Declaration
xxxix

on Fundamental Principles and Rights at Work and the ILO Declaration on Social Justice for
a Fair Globalization, and recognizing the significant contribution of domestic workers to the
global economy, which includes increasing paid job opportunities for women and men
workers with family responsibilities, greater scope for caring for ageing populations,
children and persons with a disability.
Comparative Study: Retirement Systems
of Kenya and Australia
1.29 Introduction
As elaborated in Chapter Two, there are various social welfare policy models. These are
dependent on the social, economic and political factors prevalent in the specific country. In
order to establish thus the social welfare approach taken up by a country, it is of essence to
view it against the backdrop of those which have taken up a different variant.
xl

Australia is not only the home of the koala, the kangaroo, and the duck-billed platypus, but
may also be home to that other rare and exotic animal: the secure retirement66
. Having
established its welfare system quite early and very authoritatively globally, it provides a
suitable contrast to the Kenyan system to which I wish to establish its advancements so far as
well as areas for possible improvement.
In order to further contribute to possible adaptations, it is worthwhile to incorporate aspects
of the New Zealand social welfare and retirement system which differs in certain aspects
from both the Kenyan and Australian systems and which has gained profound acclaim
worldwide.
1.30 The Australian Retirement Model
Australia’s age pension is means-tested. It is thus available to persons on a need basis. Its
system also involves a compulsory employer funded superannuation scheme, the
Superannuation Guarantee (SG). Superannuation arrangements are government-supported
and encouraged, and there are minimum provisions compulsory for employees. Employers
are required to pay a proportion of an employee's salaries and wages of 9.25% into a
superannuation fund. In addition, people are encouraged to put aside additional funds into
superannuation. January 2014 saw the introduction of the MySuper product into which
employers are required to pay default contributions to. The minimum obligation required by
employers is set to increase to 12% gradually between 2013 and 2020 with an aim to increase
the retirement benefits to accrue upon retirement.
Adequacy is a crucial factor in determining the success of a pension system. Australia is
growing towards a rate of 90% of the pre-retirement income67
. The higher the percentage, the
66
67
AUSTRALIAN RETIREMENT INCOME SYSTEMS.”
xli

less the adverse effects of retirement. This being almost at optimum, it can be seen to be
establishing an environment where standards of living do not change drastically and retirees
may remain in control of their upkeep.
The Australian system includes subsidiary legislation that requires the provision of retirement
homes in each state, the provisions of certain subsidies through designated stores,
establishment of recreational facilities for the retired and elderly as a whole.
1.31 The Contributions of New Zealand towards Comfortable Retirement
Firstly, the system is a universal one thus available to all citizens without consideration of
other factors68
. Another key feature of this system is the employer funded superannuation
scheme, the KiwiSaver. It is not compulsory in the sense that employees are automatically
enrolled but can opt out. However where they do not opt out both employees and employers
are required to contribute69
.
The scheme has been used by the political forces as well to control inflation and reduce
interest rate increases70
. It therefore brings about twofold benefit; both upon retirement and to
New Zealanders as a whole. The system is also widely emulated for its economic efficiency
in the provision of welfare. This results in higher returns for the beneficiaries due to the
reduction of administrative costs.
1.32 A comparison of the Kenyan and Australian retirement situation
The National Social Security Fund under the NSSF Act 2013 and the Superannuation
Guarantee under the Superannuation Guarantee (Administration) Act of Australia are similar
in that they establish a compulsory employer funded scheme. Employers in both cases are
68
AUSTRALIAN RETIREMENT INCOME SYSTEMS” (Commission for Financial Literacy and Retirement
Income, February 2013)
69
“KiwiSaver,” accessed May 18, 2014, https://www.kiwisaver.govt.nz.
70
“Budget 2014: Don’t Expect Any KiwiSaver Changes,” The New Zealand Herald, May 12, 2014.
xlii

responsible for ensuring that each employee is a member to the fund and that contributions
are remitted regularly or else be held criminally liable.
The projected rate of the Kenyan pension scheme under the NSSF is 6% of pre-retirement
income. This pales in comparison to the 90% of the Australian scheme. Whereas, the
Australian system provides for maintenance of roughly the same pre-retirement quality of
life, the Kenyan system works to provide a supplementary kitty for the retirees. This raises
the question of where then the retired, especially the Tier I contributors are to source their
main sustenance upon retirement.
Whereas the Australian system delves not only into economic aspects of retirement but also
social ones, Kenya is seen to lack considerations for the social needs that arise at this stage of
life. It is argued that the economic capacity of Kenya cannot allow for such a stretch. It
however cannot stand strong against the reality of the vulnerability of the aged in the country
who require care as well as protection of their standing in society.
1.33 Lessons and Conclusion
The contributions of both Australia and New Zealand provide a diverse enough selection for
research, testing and possible adoption by Kenya.
Australia can be seen to have provided for its retirees a more comfortable retirement than
many countries including Kenya due to more financial security, better tax laws, and a
generally higher standard of living71
.Its government policy and its longer journey of social
welfare reforms have made it possible. Additionally its flourishing stock market has seen
great retirement benefits due to successful investment of contributions. Kenya may want to
adopt applicable policies to ensure a thriving economy upon which welfare can be catered
for.
71
xliii

The establishment of minimum standards of welfare, even for low-income earners, is vital to
ensure a decent standard of living for all income categories of workers. This is essential as all
retirees face the same predicaments and costs especially in relation to modern healthcare.
There are also social aspects in Kenya that still need consideration. These include the
establishment of state-run old age homes, subsidies for the retired as well as incorporation of
the retired in both social and political posts, in order to ensure the representation of their
needs.
Summary, Recommendations and
Conclusion
1.34 Summary
Retirement is a period in which a worker finds themselves in unchartered waters. It brings
about an array of challenges to which the person may no longer have the control or economic
power or influence to rely on self-help. As in other situations of vulnerability, the citizens
then look upon the Sovereign to make use of the might collectively ceded to it so as to protect
those needs unique to their situation.
xliv

The law comes in with various methods to ease the situation. Social welfare thus develops
and evolves to cater for the needs of the people to the capacity its economy will allow. This is
evidenced by the social welfare policies that a country adopts.
Kenyans have reprieve from laws that provide them with access to information, protection of
their retirement contributions, and access to healthcare, among others. The road ahead is
however still winding despite developments such as the 2013 NSSF Act.
Working towards attainment of global standards is a strength of Kenya’s and could see future
it achieve better quality of life not just for the retired but for its citizens as a whole.
1.35 Recommendations
• Despite there being numerous legislation relevant to retirement, there is room for
further consolidation of retirement legislation which would create greater
clarity in the resolution of situational challenges facing them
• In relation, there is need for establishment of a single authority capable of
investigating and formulating on the broad array of retirement matters. The
Retirement Benefits Authority came as a saviour to many Kenyans losing out on
their hard earned savings due to unscrupulous pension schemes. However, there
are still many other aspects to retirement including social ones such as the role of
the elderly in a decreasingly sociable culture.
xlv

• Another option may be to increase the mandate of the Retirement Benefits
Authority, it being the major authority charged with matters solely of retirement.
Its establishment on the values of transparency, accountability and oversight
would be beneficial not only to pension scheme management but also
management of other specialised benefits to the retired such as healthcare
provision and maintenance of social amenities countrywide such as retirement
homes.
• The relevant ministries namely the Ministry of Labour as well as the Ministry of
Gender, Social Development and Children Affairs should be tasked with the
adoption and implementation of well formulated legislative provisions. There
should also be established subsidiary bodies to carry out research to determine the
effectiveness of legislation and make appropriate recommendations for
amendment.
• Strategic planning on increasing the retirement age. There remains great minds
being unexploited due to a relatively low retirement age. At 60, there are many
able-bodied persons whose years of experience retain great benefit to the society
but are barred by the impending ceasing of their employment. It may further be a
reason for low morale and decreased productivity as the final years approach as
opposed to old age
• Partnership between the public sector with both private sector and
nongovernmental organisations. The involvement of these parties will not only
incorporate their expertise in order to develop the best model possible for
retirement in Kenya but it will also ease the burden on the government and
consequently on the taxpayer. Bodies such as the United Nations Development
xlvi

Programme for instance, have wide knowledge and scope to aide in the realization
of an effective retirement model for Kenya in the pursuit of achieving the
Millennium Development Goals and Kenya’s Vision 2030.
• The importance of matters relating to the elderly can be said to be ignored or
undermined in comparison to those of other special groups in society. This for
instance can be seen by the presence of a Ministry for Youth Affairs but little
importance for the affairs of the over 60s whose contribution to heritage and
cultural matters should be tapped for smooth generational transition as well as a
reserve of knowledge otherwise lost in a generation.
• The government should minimize the bottleneck that is usually involved in
payment of social security and pensions72
. Such payment should be possible
within a month of leaving service
• Provision of finances, tax exemptions and subsidies for the elderly. It is
essential for protection of the country’s over 60s. However, little benefit can arise
where there is general high cost of living and inflation. The state should thus
ensure financial security, better tax laws, and a generally higher standard of living
for all its citizens.
• The encouragement of early investment for retirement: This will ensure that
they not only rely on their contributions or state subsidies but have other sources
of retirement income.
• Establishment of fully equipped housing estates/retirement homes, recreation
centres and other specialized amenities for the retired. At par with economic factors,
72
Onyinye, “Problems and Prospects of Retirement Adjustment on Families of Retirees among Civil Servants in
Ekiti State, Nigeria.”
xlvii

social problems are both a cause and a result of the retiree’s predicament. As such, the
government should establish specialized recreational facilities to occupy and aide the
retired.
Challenges Kenya may face in the implementation
Socially
- Contemporary Kenyan culture has moved away from its community- based approach
and rather depicts more individualistic tendencies. This is a hindrance to socialisation
and values such as respect for the elderly. Neglect of the old is thus prevalent and
reflects in the lack of urgency to adopt policies to cater for the elderly due to views of
them being a burden rather than valuable contributors to society
- Kenya can also be said to lack a strong culture of social work. It will therefore be
difficult to implement programmes to cater effectively for the elderly. Fields of study
dealing with social work are thus unpersuasive for pursuit to many.
- There is also the challenge of rural-urban migration of the able-bodied while the
elderly seem to be following the pattern of urban-rural migration. Finding a balance
so as to ensure this does not frustrate the efforts thus far made for the urbanization of
rural areas may be problematic. This in turn will lead to inadequate amenities for the
migrating retiree.
- The move to cater specifically for the retired may be viewed as a move to rob the
youth of resources they have fought for over the years. This may create further rift
between the age groups and eliminate any goodwill subsisting between them.
Politically
xlviii

- Legislators have the difficult task of balancing both their legislative role and the
political nature of that role. For instance proposals of higher taxes in order to
increase government budgeting for welfare may not sit well with already pressed
taxpayers. Future legislation is thus highly dependent on the prevailing political
atmosphere.
- There may also be difficulty establishing a national system of social welfare due to
the diverse communities represented by the county system of governance as well as
divergent economic policies of the constituent county governments.
Financially
There are high monetary costs to be incurred to implement the changes required to establish
better social security and welfare in Kenya73
. These costs may be detrimental financially to
the following parties:
- Taxpayers to whom the financial obligations of the state will be transferred
- The retirees themselves and workers in general, as higher contributory rates will be
imposed to mostly insufficient salaries in the course of employment
- The economy as a whole as it will be burdened by the recurrent expense of providing
and maintaining social welfare
1.36 Conclusion
Retirement as a concept is necessary. It facilitates transition in the job market between
successive generations. In addition, it enables the aging to enjoy their golden years. This
however is only possible where they have conditions are conducive for such enjoyment. This
is the role of a thriving social welfare system.
73
NYABIAGE “State’s Pension Bill Balloons with 20,000 New Retirees”
xlix

In Kenya, there are an increasing number of persons grappling with hard economic times
resulting from the general increased cost of living. Furthermore burdens of increasingly
higher age of dependents finds them in a more urgent position to have the economic muscle
to fend for their needs as well as that of their loved ones. This has seen persons who should
be enjoying the fruits of their labour instead diving back into the workforce further
heightening the crisis that is youth unemployment.
From both an economic and social view thus, a situation arises where it is thus prudent to
protect and provide certain material needs for those in retirement by those able-bodied
majority who can have the two-fold benefit of replacing their predecessors in more available
employment as well as gaining valuable experience through transition from willing elders
readied by a comfortable retirement.
African countries including Kenya awoke to the importance of such a system, proven by the
various provisions outlined in Chapter 3 of this study. However, as with all other
advancements including technological, health-related and economic, there need be constant
reaction by lawmakers that can reflect in the legislation for a more conducive social situation.
With increasing worries about the state of pension funds and care for the elderly by the
society, practical steps need be taken with urgency to recoup lost time and the resource of our
retired citizens. Both the systems of Australia and New Zealand provide a diverse enough
selection for research, testing and possible adoption by Kenya. Some of the lessons include
that for there to be achievable reforms to improve the standards of living of the retired, there
need be general growth of the country as a whole. This involves increased financial security,
better tax laws, and a generally higher standard of living74
for all Kenyans.
74
Baab-Muguira, “Want a Comfortable Retirement? Move to Australia.” para. 5.
l

The task lies with legislators to bridge the gap between the youth and the elderly by keeping a
step ahead so as to curb preventable societal unrest and rather tap into their diverse
contributions. Despite it being an uphill task, good legislation coupled with effective
institutional backing to administer legislative adjustments, will see Kenya establish itself as
an authoritative example of an environment suitable for retirement.
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liv

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lv

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