Kenyans to start paying new NSSF rates this month

The Federation of Kenya Employers (FKE) has finally give its members the go ahead to implement the new NSSF deductions after a consensus between them and the State agency’s board of trustees following the Court of Appeal judgment on February 3, 2023.

FKE, which was seemingly hesitant on the implementation process and time, has now written an advisory to its members to effect the changes starting with the February 2023 payroll.

The federation, in an advisory to employers on a letter dated February 9, said: “Following the decision of the Court of Appeal on NSSF Act 2013, the NSSF has commenced the immediate implementation of the act and released public announcements on the process and rates applicable for both tier 1 and tier II contributions.”

The employers were advised to deduct and remit the said monthly contribution to the fund by 9th day of every month.

According to the NSSF Act 2013, an employee is expected to contribute 6 per cent of their salaries to the NSSF, another six per cent to be matched by their employer.

An employee in tier 1 earning Ksh.6,000 per month should be deducted Ksh.360 per month, and their employer to pay a similar amount making it a total of Ksh.720.

An employee in tier II who is earning Ksh.18,000 and above per month becomes the upper limit of contributions, paying Ksh.1,080, their employer should match up a similar amount to give a total of Ksh.2,160.

This is up from a flat rate of Ksh.200 that all the employees have been paying.

The Central Organization of Trade Union (COTU) has welcomed the decision by NSSF board of trustees to effect the new law, saying social security is a human right that focuses on addressing the universal need for protection against certain life risks and social needs.

According to COTU Secretary General Francis Atwoli, many workers have been contributing to and receiving funds from the provident fund which is a lump sum payment for tier 1, leaving them exposed to old age poverty with no social security covering them.

According to Atwoli, Kenyan workers will be contributing to and receiving funds from the pension fund under NSSF which is a combination of both provident fund tier 1 and the pension fund tier II.

An employer may opt out of tier II for a better scheme but according to Atwoli, over and above the lump sum payment received at ago after retirement from NSSF, Kenyan workers will be entitled to monthly benefits as they would have respectively contributed under tier II.