Kenya’s hard pressed workers will now have to part with six per cent of their monthly income to the National Social Security Fund* (NSSF) following President Uhuru Kenyatta’s approval of the new NSSF Bill 2013.
It perhaps didn’t get to your attention considering that the bill was passed by the National Assembly and assented to by the president at the height of Christmas festivities but the new NSSF Act comes with a set of new terms compared to the former NSSF Act (Cap 258).
INCREASE TO 12 PERCENT
Previously, employees were remitting a fixed amount of Sh400 for their monthly NSSF contributions whereby half of the amount was paid by the employer as stipulated in the NSSF Act (Cap 258) but now, under the new legislation, the mandatory contributions will comprise a total of a minimum 12% of a person’s earnings divided as follows:
- Employer contributions of 6%
- Employee contributions of 6%,
This means if an employee is earning Sh50,000 for instance, they will now be contributing Sh1500 monthly for NSSF which amounts to Sh3,000 in total for both employee and employer contributions.
The new NSSF Act 2013 also stipulates that the existing NSSF will be converted from a provident fund to a pension scheme and also sets out a liable fine of Sh300,000 to any employer who fails to deduct and remit contributions to the NSSF, neglects or refuses to register with NSSF.
Also, unlike in the old legislation where there were no provisions for tiers in the contribution structure, the new Act allows for two tiers in the contributions;
- Tier I contributions: All is remitted to NSS
- Tier II contributions: Goes to NSSF, or to a registered private pension scheme of which the employee is a VALID member by the commencement date.
Unlike the old NSSF act which limited mandatory membership only to the NSSF, the new Act gives provisions for membership in other pension schemes.
*The National Social Security Fund is a statutory public trust that provides social security protection to workers in the formal and informal sectors.