The NSSF Act 2013
The NSSF Act 2013 was introduced on 24 December 2013 to replace the NSSF Act Cap 258 of 1965. It was not fully implemented until 3 February 2023 when the Court of Appeal declared the Act constitutional and directed its implementation with immediate effect. The Act requires that both you and your employees increase your NSSF contributions from KES 200 per month to 6% of pensionable salary (subject to certain salary maximums). These contributions will be on a graduated scale referred to as tiers.
Calculation of Contributions
Tier 1 Contributions
These are calculated as 6% of an employee’s pensionable income up to a maximum referred to as the Lower Earnings Limit (L.E.L). This is currently capped at KES 8,000 per month. The maximum contribution for Tier 1 contributions is thus KES 480 per month. This is applied both for the employer and employee contributions summing up to KES 960 per month. Tier 1 contributions MUST BE remitted to NSSF.
Tier 2 Contributions
Tier 2 contributions are based on 6% of an employee's pensionable earnings currently capped at KES 72,000 per month for the year 2025. The maximum Tier 2 contributions are therefore KES 3,840 per month being calculated as 6% of KES 64,000 (i.e. Upper Earnings Limit (U.E.L) of KES 72,000 minus Lower Earnings Limit (L.E.L) of KES 8,000 for both the employer and employee. Tier 2 contributions can be remitted to NSSF or to a Retirement Benefits Authority (RBA) approved retirement benefits scheme such as the Britam Umbrella Retirement Fund. This is referred to as contracting out.
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