LEV 1

NSSF contributions

1Scope and legal basis

The National Social Security Fund Act 2013 replaced the 1965 Act's flat KES 200 contribution with an earnings-related scheme for every employee in Kenya aged 18 to 60 (and voluntary membership for the self-employed). After eight years of litigation the Court of Appeal upheld the Act in February 2023 and the Supreme Court dismissed the final challenge, so the new contributions began in February 2023 and have risen each February through a five-year phase-in: year 4 began on 1 February 2026 with a lower earnings limit of KES 9,000 and an upper earnings limit of KES 108,000. The contribution is 12% of pensionable earnings, split equally, 6% from the employee by deduction and 6% from the employer. Contributions and the Fund's investment income are tax-exempt, and the employee's contribution is deductible for PAYE within the KES 360,000 annual pension limit. The Fund pays retirement, invalidity, survivors', emigration and funeral benefits, and the Retirement Benefits Authority regulates it. Employers may contract out of Tier II into a private registered scheme with the RBA's approval.

2Key definitions

3Charge, computation and rates

The phase-in and the 2026 figures

Benefits and their tax treatment

• Retirement pension or lump sum at 60 (or early retirement from 50): exempt from income tax under the Finance Act 2025 rule for benefits on attaining retirement age; the Fund pays a monthly pension from the member's accumulated Tier I and Tier II credits with interest, or a lump sum where the balance is small.
• Invalidity benefit on permanent incapacity, survivors' benefit to dependants on death, and the funeral grant: exempt.
• Emigration benefit for a member leaving Kenya permanently, and a withdrawal benefit where the member ceases to be employed and reaches the withdrawal conditions: taxed as a pre-retirement withdrawal under the Income Tax Act rules (own contributions plus KES 60,000 per year of membership tax-free, then the withdrawal or graduated rates), with the Fund withholding the tax.
• The Fund's investment income is exempt, and the member's account earns the declared interest each year without tax.

Coverage and interaction with other deductions

• Every employer with at least one employee must register with the Fund and register each employee (including casuals paid monthly, domestic workers and contract staff); expatriates on work permits are covered unless a bilateral social security agreement exempts them.
• The NSSF deduction is taken before PAYE alongside SHIF and AHL, and the employer's NSSF cost is part of the employment cost for the NITA levy and for budgeting the 12% total.
• An employer that already contributes to a private scheme decides between contracting out of Tier II (RBA approval, equivalence test, annual compliance) and paying Tier II to the NSSF while continuing the private scheme on top; the KES 360,000 tax limit applies to the employee's total contributions across NSSF and the private scheme.
• The Fund is separate from the Social Health Insurance Fund and the Affordable Housing Levy, which have their own Acts, rates and portals (LEV 2), though all three are remitted by the 9th of the following month.

4Compliance: returns, payment and penalties

• Register the employer and each employee on the NSSF self-service portal (employee NSSF numbers are required), deduct the employee's 6% each month, add the employer's 6%, and file the monthly return (the SF24 schedule uploaded on the portal, generating a payment order) and pay by the 9th of the following month through the Fund's bank collection accounts, KRA-integrated payment channels or mobile money.
• Late payment attracts a penalty of 5% of the contributions due for each month or part of a month of default (section 19 of the Act), which the Fund may recover with the contributions as a civil debt, with the directors and officers liable; deducting contributions and failing to remit them is an offence, and the Fund's inspectors may audit payroll records and demand arrears for up to six years.
• Contracted-out employers file compliance returns with the RBA and the NSSF and must remit Tier I to the NSSF and Tier II to the scheme by the same deadline; loss of RBA approval returns Tier II to the NSSF.
• Employees can check their statements on the portal; a member who reaches 60 applies for the benefit with the employer's certificate of service, the NSSF card and identification, and the Fund withholds any tax due on a withdrawal.

5Examinable focus