The Year 2025, shall be the 3rd year of implementation of the rates as a prescribed by the Third Schedule of the National Social Security Fund (NSSF) Act, 2013 (Act). The implication of this is that the rates that were prescribed under the NSSF Notice of 2024 shall no longer be in force, with new rates being introduced.
With effect from the February 2025 payroll, the applicable rates thus in terms of the Lower Earnings Limit (Tier I) and the Upper Earnings Limit (Tier II) shall be as follows as per the Third Schedule of the Act: –
| Year | Lower Earning Limit in Kshs. | Upper Earning Limit |
|---|---|---|
| 3 | 8,000 | 2 times National Average Earnings |
Taking note that the applicable contribution rate is 12% of an employee’s monthly earnings, with a 6% deduction on the employee and an equivalent 6% deduction from the employer, this means that in terms of Lower Earning Limit (LEL) the amount payable shall be as follows: –
| Description | Lower Earning Limit in Kshs. |
|---|---|
| Total Contribution by employer being 6% of the LEL of Kshs. 8,000 | 480 |
| Total Contribution by employee being 6% of the LEL of Kshs. 8,000 | 480 |
| Total Tier I NSSF Contributions | 960 |
In terms of the Upper Earning Limit (UEL), the same is hinged on the National Average Earnings which is Kshs. 36,000 as per the NSSF Notice of 2024. For the year 2025, the UEL being 2times the national average earnings means that the same is Kshs. 72,000, that is, 36,000*2. Thus, in terms of computation for the same, it will be as follows: –
| Description | Upper Earning Limit in Kshs. |
|---|---|
| Upper Earning Limit less Lower Earning Limit (72,000 – 8000) | 64,000 |
| Total Contribution by employer being 6% | 3840 |
| Total Contribution by employer being 6% | 3840 |
| Total Tier II NSSF Contributions | 7,680 |
From the above breakdown, it follows that the total NSSF Contributions for the Year 2025 shall be Kshs. 8,640 as below: –
| Description | Amount in Kshs. |
|---|---|
| Total Tier I Contributions | 960 |
| Total Tier II Contributions | 7,680 |
| TOTAL NSSF CONTRIBUTIONS | 8640 |
IMPLICATION OF THE NEW RATES
Taking note of the other contributions that are being deducted from an employee’s pay slip including the Social Health Insurance Levy, the Affordable Housing Levy and PAYE, it goes without saying that the new NSSF rates will to a great extent stretch on the pay slips of those in employment.
