The Amended NSSF Act 2013: How it Impacts You and Your Payslip

What is the NSSF Act 2013?

The National Social Security Fund (NSSF) is a statutory body established under the National Social Security Fund Act No. 45 of 2013.

The previous NSSF Act of 1965 was replaced by the NSSF Act of 2013 after the NSSF Bill 2013 was passed by the National Assembly on 4th December 2013 and received presidential assent on 24th December 2013. It repealed the NSSF Act (Cap 258) and replaced it with the NSSF Act 2013.

The NSSF’s main goal is to provide social security benefits to workers in Kenya, including retirement benefits, survivor benefits, and invalidity benefits. The social fund registers members and receives regular contributions towards realizing these objectives, including processing and paying out benefits to members and dependents.

What are the changes in the amended NSSF Act 2013?

Following a Court of Appeal ruling on February 3, 2023, the amended NSSF Act 2013 was declared legal and constitutional, ending a prolonged legal battle that started in 2014 and is being implemented by all employers in Kenya. The amended NSSF Act 2013 has introduced several changes that affect Kenyans and their payslips. The key highlights of the changes in the NSSF Act 2013 include:

  • Convert the existing NSSF from a provident fund to a pension scheme.
  • Introduction of a new contribution structure. The contribution rate changed from the fixed amount of Kshs. 200 to 12% of the monthly employee’s pensionable earnings, with 6.0% deducted from the employee and 6.0% contributed by the employer.
  • Retirement age was capped at 60 years (from 55 years).
  • Contributions to the scheme have been divided into two categories, Tier I and Tier II:
    Tier I contributions: The contributions are pertinent to the salaries and wages that fail to meet a maximum of Kshs. 720 of the Lower Earning Limit. All the contributions made are remitted to NSSF.
    Tier II contributions: The excess amount for wages and salaries between the Upper Earning Limit and the Lower Earning Limit at a maximum of Kshs. 1,440 will be credited to the Tier II account. The contributions made go to NSSF or to a registered private pension scheme of which the employee is a VALID member.
  • Both Tier I and Tier II contributions are mandatory.
  • All pension contributions are tax-deductible.
  • Employers with more than one employee in their businesses are required to register with the NSSF and remit contributions every month.
  • Employers should ensure that all their workers are registered members of NSSF.
  • Employers are required to remit contributions to the NSSF by the 9th of every month.
  • Late payment of the monthly contribution will attract a penalty of the entire monthly donation for every delayed month or the section of the month in which the employer or worker has failed to remit their contributions.
The Amended NSSF Act 2013 Changes

What is the Impact of New NSSF Rates on You and Your Payslip?

The amended NSSF Act 2013 proposes that a total of 12% of the pensionable income shall be remitted to NSSF by the employers and employees. The Act stipulates that the Upper Earning Limit (UEL) shall be Ksh. 18,000 while the Lower Earning Limit will be Ksh. 6,000. The contribution to a maximum of Ksh. 720 relating to the Lower Earning Limit (LEL) will be credited to the Tier I account while the contribution of up to a maximum of Ksh. 1,440 relating to earnings between the Lower Earning Limit and Upper Earning Limit will be credited to the Tier II account.

Putting this into perspective, individuals who earn Ksh. 15,000 a month, will be required to contribute Ksh.900 (Ksh. 360 credited to Tier I account and Ksh. 540 credited to Tier II account); while for those earning at least Ksh. 50,000 per month ought to have about Ksh. 3,000 taken out of their paychecks but the pensionable income is capped at Ksh 18,000 thus the amount contributed by the individual to a maximum of Ksh. 1,080.

Lower Earning Limit (LEL)Upper Earning Limit (UEL)Tier ITier IITOTAL
6% (6,000)​​6% (12,000)​360​360​720​720
New NSSF Rates

In light of the above, it is clear that there will be a significant increase in operational costs to businesses operating in Kenya with a greater impact on businesses that do not have private schemes. Employers will also have to relook their pension contribution provisions for the occupational, umbrella or individual schemes with possible amendments to the scheme’s trust deed and rules to allow them to offset NSSF contributions against contributions to their schemes.


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