Effective 1st February 2025, the NSSF contributions rate have been increased in accordance with the schedule 3 of the NSSF Act No 45 of 2013. The increase is part of the third phase of the phased implementation of the NSSF ACT 2013 which aims to enhance the retirement benefits of employees by gradually increasing the contribution rates over a period of 5 years.
Employees and employers will contribute 6% of the employee’s monthly salary to the NSSF.
For Tier I which is the lower earnings limit: Contribution base has been adjusted from KSh 7,000 to KSh 8,000.
For Tier II which is the upper earnings limit: The contribution base has been adjusted upward from KSh 36,000 to KSh 72,000.
The above contributions are due by 9th of every month.
Increased pension savings for the employees
Decrease on the employees net pay
Increased staff costs due to the increased employer contribution
Employees who are already contributing to a registered pension scheme are eligible to opt out of the NSSF contributions for Tier II only, as long as the pension scheme meets the regulatory requirements set by the Retirement Benefits Authority (RBA).
The employer shall make written request of its intention to opt out to the Retirement Benefit Authority at least sixty days before opting to contract-out The Retirement Benefit Authority shall require from time to time in order to ascertain that the contracted-out scheme meets the Reference Scheme Test; The Retirement Benefit Authority shall respond in writing within 30 days indicating its approval or otherwise to the employer and notify the Board accordingly; Upon approval is received, Tier II Pension Fund Credits in respect of the employees shall be transferred from the Pension Fund to the approved contracted- out scheme;
We recommend that you review your payroll system and ensure that the new contribution rates are implemented starting February 2025. If you have employees who are eligible to opt out of Tier II contributions, ensure that the necessary documentation is submitted to the Retirement Benefit Scheme for consideration/approval.
At Beavoren Ventures, we are available to support you in the transition management arising from the changes. Reach to our Payroll Support Team on info@beavorenventures.co.ke
Tier I Contribution: 6% of KSh 8,000 = KSh 480
Tier II Contribution: 6% of (KSh 72,000 – KSh 8,000) = 6% of KSh 64,000 = KSh 3,840
Total Monthly Contribution: KSh 480 (Tier I) + KSh 3,840 (Tier II) = KSh 4,320
Total employer and employee contribution: KSh 4,320 + KSh 4,320= KSh 8,640.