Employment Tax

Kenya | National Social Security Fund (NSSF) – 2025 changes

Summary

The National Social Security Fund (NSSF) is a mandatory co-contributory state-run pension scheme. All employers and employees are required by law to register and make monthly contributions to the scheme via payroll deductions. Employers are obligated to remit such contributions to NSSF by the 9th of the month following the payroll month.

The detail

New change to the NSSF Act

The Third Schedule of the NSSF Act, 2013 enters its third year of implementation in 2025. According to the Act, the contributions to the NSSF are set for a 3rd anniversary adjustment. This adjustment will affect both the lower and upper earnings limits.

Accordingly, therefore effective February 2025, the following adjustments will take effect:

1. Lower Limit (Tier 1) – The Tier 1 limit will increase from KES 7,000 to KES 8,000, raising the minimum contribution from KES 420 to KES 480 per month.
2. Upper Limit (Tier 2) – The Tier 2 limit will increase from KES 36,000 to KES 72,000 raising the maximum contribution from KES 1,740 to KES 3,840 per month.

The table below summarizes the applicable rates February 2025:

	Current rates	New rates
Lower Limit	7,000	8,000
Employee contribution (6% of lower Limit)	420	480
Employer contribution	420	480
Total Tier 1 contributions	840	960
Upper Limit	36,000	72,000
Employee contribution (6% of Upper Limit less Lower Limit)	1,740	3,840
Employer contribution	1,740	3,840
Total Tier 2 contributions	3,480	7,680
Total NSSF contributions	4,320	8,640

What is the impact of the increased contribution rates?

The increased contribution rates will have both negative and positive impact:

1. Employees will be impacted more, in terms of higher deductions than before, consequently reducing the net take home pay.
2. It will increase cost to company in terms of higher employer contribution.
3. On the other hand, it will lead to good saving for retirement culture, and this can also induce higher investment by the fund.

Opting out

It is worth to note that employers who have private qualifying pension schemes are restrictively at liberty to opt out of the NSSF under the Tier II contributions.

Accordingly, therefore employers who wish to participate in or establish a private pension scheme may apply to the NSSF board for approval to opt out of Tier II contributions.

Contact us

For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:

Andrew Ondieki
Director

Kennedy Kyalo
Senior Manager

David Muasya
Senior Associate

Ruth Mayenga
Senior Associate

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