Employers are now uncertain over the new NSSF contributions which should take effect from February 2024. Implementation of the law requires that the deductions will be raised to a specific amounts over the first five years. The government started implementing the National Social Security Fund Act of 2013 in February last year, raising mandatory pension contributions from a flat of Sh200 per employee with an equivalent contribution from the employer.
Employers are required to stay alert and take note of the newly published NSSF rates and ensure full compliance to avoid any penalties. Payment of NSSF contributions in Kenya was for a period governed by the National Social Security Fund Act, Cap 258 of the laws of Kenya of 1965.The Act concluded the contributions at Sh200 to be paid by both the employee and the employer.
However, on December 24, 2013, the National Social Security Fund Act was assented and the commencement date was scheduled to January 10, 2014. Before full operation of the Act would take force, Kenya Plantation and Agricultural Workers’ Union moved to court and filed a case challenging certain provisions in the Act and their constitutionality. After out-of-court engagements, the parties agreed to unlock the NSSF Act of 2013.
In 2023, the court of appeal allowed the government to implement a new law that increased the NSSF contributions. This law took effect in February 2023.There was a lower earnings limit (LEL) for employees who make less than Sh6,000, with an upper earnings limit (UEL) for employees who earn Sh18,000 or above.
The monthly matching contributions by both employees and employers rose from the current Sh400 to 12 per cent of a worker’s monthly pensionable income (6 per cent from the employee and 6 per cent from the employer – both contributing an equal amount), with a maximum contribution of Sh2,160 for workers earning more than Sh18,000 per month.
The first year of implementing the NSSF Act 2013 ends this month.
By Lean Simatwa