The National Social Security Fund (NSSF) has released its new contribution rates in compliance with the court ruling.

The government agency responsible for the collection, safekeeping, responsible investment and distribution of retirement funds of employees released the new rates in compliance with the NSSF Act No. 45 of 2013.

In a press release, highlighted the rates as follows:

Employer ContributionEmployee Contribution
Tier 1 (Ksh)360360
Tier 2 (Ksh)720720

Employees and employers will start feeling the impact of new pension contribution rates this month after the National Social Security Fund (NSSF) asked employers to comply with the law raising monthly contributions immediately.  This follows a proposal to increase the National Social Security Fund (NSSF) and National Health Insurance Fund (NHIF) rates as outlined by the NSSF Act 2013.

Employees falling under the tier one category will each contribute Sh360 to the fund monthly, up from Sh200.

NSSF classifies workers under Tier 1 as those earning salaries below Sh18,000, while those earning above this are classified under Tier 2. This means that if you earn below Sh18,000 you will now be deducted Sh360 monthly as your employer matches an equivalent amount to be channeled to your pension. If you earn above Sh18,000, you will be deducted Sh720 monthly with your employer matching an equivalent amount.

NSSF directed that employers and employees under the tier two category will each contribute Sh720 monthly, summing up to Sh1,440 for both parties.

The total contributions for both employee and employer is KES 2160 per month

The changes will be implemented with immediate effect.

Calls to raise the contributions started after President William Ruto insisted on the need to grow the country’s savings to rescue it from debts as he castigated the Sh200 contribution as incapable of benefiting retirees.

“There is no retired Kenyan today who is living on their NSSF retirement benefits. The meager contribution of Sh200 a month adds up to Sh72,000 over 30 years. There is no rate of return on earth that can grow this into an adequate pension,” Dr Ruto told MPs in September. “You cannot pretend that you are saving by saving Sh200.”

Development partners, led by the World Bank, have also supported the increase, stating last year that the Sh200 monthly contribution was low.

“The mandated contribution rate to the NSSF is extremely low, with the average contribution amounting to less than one per cent of the average private sector wage. Low contribution rates during working life and high operating cost of the NSSF mean that retirees typically receive low lump sums,” said the World Bank last year.