NSSF nets additional Sh10 billion on higher member contributions

Signage being put up at the NSSF building in Nairobi. 

Photo credit: File | Nation Media Group

The National Social Security Fund (NSSF) collected an additional Sh10 billion in the year ended June 2023, underlining the impact of enhanced contributions from Kenyan workers.

Disclosures show that the State-owned pension firm raised Sh26.87 billion in the period, reflecting a 69 percent jump from a year earlier.

The sharp rise in the collection came at a time when contributions from salaried workers were increased to Sh600 from Sh200 for the lowest earner and between Sh320 to Sh1,080 for top earners.

Higher rates are meant to offer Kenyans a bigger retirement pot and give them monthly stipends as opposed to the current one-off payment.

“Member contributions grew by 69 percent to close the year at Sh26.87 billion compared to Sh15.92 billion in 2022 on account of enhanced contributions,” NSSF says in the disclosures made last Friday.

It did not disclose the number of members in the period under review. It had 348,291 members in June 2021.

Contributions from salaried workers were increased from February last year after a ruling by the Court of Appeal that reinstated the NSSF Act, 2013, quashing an earlier decision by the Employment and Labour Relations Court.

The NSSF Act 2013 increased monthly deductions and introduced two levels for workers taking home more than Sh18,000.

However, the Employment and Labour Relations Court in September 2022 rendered the NSSF Act of 2013 unconstitutional.

The decision by the Court of Appeal allowed NSSF to enforce the new contribution rates from workers and employers who had not been complying with the 2013 Act.

Under the new scale which is graduated, Tier 1 is for those in respect of pensionable earnings up to the lower earnings limit of Sh6,000. Tier 11 is those in respect of pensionable earnings above the lower earnings limit.

NSSF also received a major boost in the wake of improved performance of the firm’s shares and higher investment of surplus funds from members.

The value of NSSF’s shares at the Nairobi Stock Exchange jumped to Sh12.34 billion, reversing the hit of Sh3.15 billion booked a year earlier in the wake of a dip in the value of the stocks.

NSSF did not however disclose the interest that it will pay to member contributions in the wake of the improved performances in the year to June 2023.

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