Tax Alert: Updated Kenya NSSF Contributions Effective Feb. 2023

There have been legal impediments since the National Social Security Fund (NSSF) Act No. 45 of 2013 (“the Act”) was enacted in Dec. 2013, giving rise to new NSSF rates.

In Feb. 2023, the Court of Appeal found that The Employment and Labour Relations Court (ELRC) erred in pronouncing the Act illegal. It determined that ELRC had no authority to do so, as that was a preserve of the High Court. Consequently, the Act is now legal, allowing the government to enforce it.

The updated NSSF rates will take effect from 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 relating to the earnings below the LEL of the earnings (a maximum of KES. 720) will be credited to what will be known as a Tier I account while the balance of the contribution for earnings between the LEL and the UEL (up to a maximum of KES 1,440) will be credited to what will be known as a Tier II account.

Sample computations are indicated in the following document:

Tax Alert - Updated Kenya NSSF Contributions Effective Feb. 2023