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Employees are set to feel the pinch of increased NSSF deductions this month after the Court of Appeal allowed the government to implement a new law that raised the contributions.
Employees and employers will start feeling the impact of new pension contribution rates this month after the National Social Security Fund (NSSF) asked employers to comply with the law raising monthly contributions immediately. This follows a proposal to increase the National Social Security Fund (NSSF) and National Health Insurance Fund (NHIF) rates as outlined by the NSSF Act 2013.
According to President, Dr William Ruto, the need to grow the country’s savings rescues it from debts, adding that the Sh200 contribution as incapable of benefiting retirees.
How will this implementation affect employers and employees? What are the new NSSF rates? Find out more down here.
In an earlier brief, the majority of Kenyans have been contributing Ksh. 200 per month, which adds up to about Ksh. 72,000 over 30 years. The proposal was meant to move the average Ksh. 200 to Ksh. 2,160 or about 5.6% of an employee’s monthly salary. Notably, the employer should match the same.
NSSF Monthly Deductions Hiked After Court Upheld New NSSF Law
New NSSF rates are effective as of February 2023. Therefore, employers and employees will notice changes in their payroll and payslips figures, respectively.
What are the new deduction rates for NSSF in Kenya?
Employees earning above Sh18,000 were to be divided into two levels of contributions called tier I and tier II. Employees and employers under the tier two category (those above the lower limit) are required to contribute each Ksh. 720 monthly to attain a total of Ksh. 1,440 per month from both parties. On the other hand, those under tier one are required to contribute Ksh. 360 per month, and their employers should match the same.
*These are the rates to be implemented as per the 1st year of the 3rd schedule of the NSSF Act No 45 of 2023
The minimum contribution is set at Ksh. 720 while the maximum is Ksh. 2,160.
Will it be Compulsory to Pay Pension Contributions?
According to Section 18 of the NSSF Act 2013, all persons who are subject to employment and are over 18 years ought to be members of the Pension Fund. Besides, employers are required to deduct contributions from their employees’ salaries.
The good news is, for anyone using the Workpay HR and Payroll system, all the changes are automatic and you do not have to do anything, we’ve got you!
If you are yet to join the Workpay side of things, talk to us today and enjoy real time statutory changes.
Explore the updated statutory deductions with the new NSSF Rates on the Workpay PAYE Calculator.
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