The National Social Security Fund (NSSF) Act has undergone significant revisions. This impacts the monthly contributions made by both employers and employees. Previously, a fixed monthly contribution of KES. 200 each from employers and employees capped the total at KES. 400. However, the new NSSF Act mandates a monthly contribution equivalent to 12% of an employee’s monthly salary, with 6% deducted from the employee’s salary and the remaining 6% paid by the employer.
For employees earning above Sh18,000, the Act introduces two contribution tiers – tier I and tier II. Tier II contributors, falling above the lower limit, are required to contribute Ksh. 720 monthly, with both the employee and employer contributing, resulting in a total of Ksh. 1,440 per month. Conversely, tier I contributors are required to contribute Ksh. 360 per month, matched by their employers.
According to Section 18 of the NSSF Act 2013, all employed individuals over 18 years old are mandated to be members of the Pension Fund. Employers are also obligated to deduct contributions from their employees’ salaries.
The recent Court of Appeal decision allowing the government to implement the new law means that employees will experience increased NSSF deductions starting this month. The NSSF has communicated the updated contribution rates for the second year to all employers, effective from the February 2024 payroll. Employees should be prepared for these changes and consider how they may impact their monthly earnings and overall financial planning.
