Tax Alert: Revised Kenya NSSF Contributions Effective Feb. 2023

Revised Kenya NSSF Contributions

Since the National Social Security Fund (NSSF) Act No. 45 of 2013 ("the Act") was enacted in December 2013, giving rise to new NSSF rates, there have been legal impediments.

The Employment and Labour Relations Court (ELRC) erred in declaring the Act illegal, according to the Court of Appeal in February 2023.
It determined that the ELRC lacked the authority to do so because that was the domain of the High Court.
As a result, the Act is now legal, and the government can enforce it.

The new NSSF rates will go into effect in the payroll month of February 2023.

There will be a lower earnings limit (LEL) for employees who make less than KES.
6,000, with an upper earnings limit (UEL) for employees who earn KES.
18,000 or above.

The monthly matching contributions by both employees and employers will rise from the current KES.
400 to 12% of a worker’s monthly pensionable income (6% from the employee and 6% from the employer – both contributing an equal amount), with a maximum contribution of KES.
2,160 for workers earning more than KES.
18,000 per month.
Employee contributions will still be drawn directly from their salaries and wages while employer contributions will still come directly from the employer.

Contributions for earnings below the LEL of earnings (up to a maximum of KES 720) will be credited to a Tier I account, while the balance of contributions for earnings between the LEL and the UEL (up to a maximum of KES 1,440) will be credited to a Tier II account.

Sample computations are indicated in the following document: