The National Social Security Fund (NSSF) has disclosed its intention to augment contribution rates for workers and employers in Kenya starting February 9th, 2024.
Functioning as a government-operated pension scheme, the NSSF plays a crucial role in providing retirement benefits and social security to the workforce of Kenya.
The adjusted rates are in alignment with the provisions outlined in the 3rd Schedule of the NSSF Act Cap 45 of 2013.
As per the NSSF notice to all employers, the contribution rates will be stratified into two tiers. In Tier I, predicated on the revised lower limit of KES 7,000 (an increase from the existing KES 6,000), workers will now be obliged to remit KES 420 (up from KES 360), with employers matching this amount. This tier encompasses all individuals earning up to Kes 7,000 monthly.
Under Tier II, contingent on the updated upper limit of 1x the national average wage (a rise from the existing 0.5x), employees will need to contribute KES 1,740 (escalated from KES 720), matched by employers. This tier encompasses individuals earning above KES 7,000 monthly.
Encouragingly, Tier 2 deductions will persist in being based on the national average wage reported in 2013/14. This approach, as opposed to utilizing current figures, mitigates the potential for even higher Tier 2 contributions.
The NSSF has communicated that these revised rates aim to ensure increased contributions from both workers and employers, consequently leading to enhanced benefits from the fund.
Furthermore, the NSSF has strongly advised employers to adhere to the new rates and timely remit the contributions to avoid incurring penalties and interest charges.
While the adjustments translate to larger deductions for both companies and employees, the NSSF emphasizes that these changes are geared towards fortifying retirement benefits in the long run.
