Gross income (Kshs) Monthly Premium Amount (Kshs)

Up to 5,999 150
6,000 - 7,999 300
8,000 - 11,999 400
12,000 - 14,999 500
15,000 - 19,999 600
20,000 - 24,999 750
25,000 - 29,999 850
30,000 - 34,999 900
35,000 - 39,999 950
40,000 - 44,999 1,000
45,000 - 49,999 1,100
50,000 - 59,999 1,200
60,000 - 69,999 1,300
70,000 - 79,999 1,400
80,000 - 89,999 1,500
90,000 - 99,999 1,600
100,000 and above 1,700
Self Employed (special) 500
Kenya: National Social Security Fund Act Signed Into Law
January 29, 2014

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Employer Action Code: Act

On December 24, 2013, following a protracted gestation period, the National Social Security
Fund (NSSF) Act 2013 received presidential assent with an implementation date of January 10,
2014 (subsequently pushed back to May 31, 2014). It replaces the previous act implemented in
1965 and revised in 1987.

Key Details

The previous NSSF Act established a provident fund (this will be referred to as
the old provident fund) into which all employees were required to pay a flat
rate contribution of KS200 (US$2.30).

The new NSSF Act has established two new funds: a pension fund and a new
provident fund. All employers with one or more employees are obliged to
register with the new pension fund. Membership in the pension fund is
mandatory for all employed persons between the ages of 18 and 60.
Members of the old provident fund will be automatically enrolled in the
pension fund. Membership in the new provident fund is now voluntary for
employees covered by the pension fund.

Contributions to the new pension fund are set out in the table below.

Contribution rate Salary basis

 Tier I: Minimum wage
Employer 6%
Tier II: National average earning

Employee 6% As above

Contributions will be divided into two tiers. Tier I will be based on the
minimum wage and Tier II on the national average earnings. Tier I will contain
contributions based on pensionable earnings up to the lower earnings limit.
The lower earnings limit is the amount periodically published by the cabinet
secretary, representing the average statutory minimum monthly basic wage
for the top urban centers, second-tier urban centers and rural areas for the
year. Tier II contributions will be based on the amounts above the lower
earnings limit.

There is a five-year transitional period before the full contribution rate is achieved. The
contributions for the next five years will increase progressively and be based on the following
earnings:

Year Lower earnings limit (KS) Upper earnings limit

1 6,000 50% of national average earnings

2 7,000 1 time national average earnings

3 8,000 2 times national average earnings

4 9,000 3 times national average earnings

5 and onward Monthly minimum wage 4 times national average earnings

Employers have the option to contract out of Tier II contributions by offering

an approved retirement benefit plan with benefits equal to or better than
those provided under the NSSF for Tier II contributions.

Employers are required to keep comprehensive records of the employee and

employer contributions paid into the pension and new provident funds,
including the salary on which these contributions are determined.

Contracted-out arrangements may be group or individual defined contribution

or defined benefit plans.

The plans benefits include retirement and disability pensions, survivor

benefits and funeral grants.
 Retirement benefits will be payable from the normal retirement age of 60
years, with earlier retirement being possible at age 50. Upon retirement, each
individuals Tier 1 account balance can be paid out as a partial lump sum,
with the remainder used to purchase an annuity from a registered insurer.
Employees will have the option of taking up to a third of Tier II balances as a
lump sum, with the remainder taken as income drawdown/scheduled
withdrawals. Payment of the Tier II benefit can be deferred to coincide with
the normal retirement date of any occupational plans into which the Tier II
contributions are paid.

Expatriates working in Kenya for less than three years are exempt from the
new arrangements, provided they are covered by an equivalent program in
their home countries. Foreign workers covered by a social security treaty
would likewise be exempt under the terms of the treaty.

Employer Implications
Employers should analyze the provisions of the new NSSF Act and ensure that appropriate
administrative procedures are put in place to meet the new obligations:

All companies will need to communicate the changes in the social security
plan design to employees and explain the option for Tier II contributions to be
paid into the new provident fund or approved retirement benefit plans.

All companies will need to set up the appropriate infrastructure to record and
pay Tier I contributions into the new pension fund.

Companies with existing occupational pension plans will need to apply to the
Retirement Benefit Authority for recognition as approved retirement benefit
plans able to receive Tier II contributions.

Companies with existing occupational pension plans should also review their
existing retirement benefit arrangements to determine any adjustments or
improvements that need to be made to integrate the benefits and
contributions of the new provident fund.