Employment Tax
Kenya | National social security fund (NSSF) act, 2013
Summary
The National Social Security Fund (NSSF) is a state-run pension scheme in Kenya where employers and employees make mandatory monthly contributions. The intention of the new NSSF Act is to have progressive deductions over a five-year period. However, there was uncertainty on the implementation when the Employment and Labor Relations Court (ELRC) declared the Act unconstitutional. The Kenyan court of appeal in its ruling reversed the ELRC position setting base for implementation of the new NSSF Act, 2013.
The Detail
The NSSF Act, 2013 second year contributions rates are implementable come February 2024. Accordingly, the NSSF issued a public notice on 11th January 2024 reminding both employers and employees of the NSSF rates applicable effective February 2024 via payroll.
In accordance with the NSSF Act, 2013 third Schedule, year 2 new monthly contribution rates will be:
a) Lower Limit (Tier 1) – The Tier 1 limit increased from KES 6,000 to KES 7,000, raising the minimum contribution from KES 360 to KES 420 per month.
b) Upper Limit (Tier 2) – The Tier 2 limit was increased from KES 18,000 to KES 36,000 raising maximum contribution from KES 720 to KES 1740 per month.
| Current rates | New rates | |
| Lower Limit | 6,000 | 7,000 |
| Employee contribution (6% of lower Limit) | 360 | 420 |
| Employer contribution | 360 | 420 |
| Total Tier 1 contributions | 720 | 840 |
| Upper Limit | 18,000 | 36,000 |
| Employee contribution (6% of Upper Limit less Lower Limit) | 720 | 1,740 |
| Employer contribution | 720 | 1,740 |
| Total Tier 2 contributions | 1,440 | 3,480 |
| Total NSSF contributions | 2,160 | 4,320 |
What this means
This notice doesn’t change contribution remittance due date i.e., the 9th day of the month following the payroll month. However, it serves as reminder to employers update their payroll systems for the purpose of compliance. Effectively this slightly increases employees’ savings and contribution benefit slightly.
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
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Further information on Vialto Partners can be found here: www.vialtopartners.com
Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
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