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Starting your first job comes with plenty of new responsibilities, and securing your future through retirement savings is one of them.
That’s where the National Social Security Fund (NSSF) comes in. As a mandatory savings scheme, NSSF is designed to protect you financially after retirement and during other critical life events.
Here are five key things every new employee in Kenya should know about NSSF:
1. What is NSSF?
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The National Social Security Fund (NSSF) is a government-run pension scheme that provides social security protection to Kenyan workers by saving a portion of their income for future use after retirement or in case of incapacitation or death.
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Photo: NSSF Social Security House
NSSF ensures that once you retire, become incapacitated, or pass away, you or your dependents can access financial support in the form of monthly pension payments or a lump sum payment.
Who needs to register?
All employed individuals, including those in the formal and informal sectors.
Self-employed individuals can also voluntarily register.
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2. How to register for NSSF: a step-by-step guide
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There are two main ways to register: through your employer or as a self-employed individual.
If you are employed
Request a letter of introduction from your employer.
Visit the nearest NSSF branch with your original and a copy of your national ID, passport or alien card.
No registration fee is required if you are registering through an employer. Your employer is also responsible for deducting your contributions and remitting them (along with their own portion) on or before the 9th of every month.
If you are self-employed
Visit the nearest NSSF branch and present both the original and a copy of your National ID, passport or alien card.
Pay a registration fee of Sh200.
As a voluntary member, you will be responsible for remitting your own contributions to the Fund.
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3. Benefits of NSSF registration for first-time employees
Registering with NSSF protects you in multiple ways and scenarios, beyond just retirement. Key benefits include:
Pension. The scheme protects against loss of income after retirement by providing a monthly pension or lump sum payment to beneficiaries.
Invalidity benefit. The scheme also protects against permanent incapacity due to physical or mental disability. Such members can claim invalidity benefits regardless of age.
Survivors' benefit. The dependents of a contributor are also shielded in case the member dies, whereby nominated dependents receive a lump sum “survivors’ benefit”. This extends to the member’s spouse, children, parents, siblings and guardians.
Emigration benefit. If you are moving permanently to another country you can access your savings.
Even in the event you become unemployed and are unable to make contributions, your savings continue to accrue interest.
4. A guide to tiers: tier 1 and tier 2 contributions
At its inception in 1965, the National Social Security Fund was a government-mandated savings scheme born out of a deliberate policy decision to create a compulsory, broad-based social insurance mechanism for Kenyan workers.
The NSSF Act No. 45 of 2013 then transformed the savings scheme into a dual Pension and Provident Fund, splitting the scheme further into two tiers; Tier 1 (Pension Fund) and Tier 2 (Provident Fund)
If you’re employed in Kenya, here’s how the two-tier deductions work:
Earning Sh8,000 or less per month? Your whole salary is pensionable. Both you and your employer contribute 6% of your gross pay to Tier 1 (the Pension Fund). Example: If you earn Sh6,000, you contribute Sh360, and so does your employer.
Earning more than Sh8,000? Only the first Sh8,000 goes to Tier 1. Then, anything above Sh8,000 but below Sh72,000 is subject to Tier 2 deductions. You and your employer each pay 6% of that portion into the Provident Fund.
Earning over Sh72,000? Good for you! But NSSF stops there. No deductions are made on anything above Sh72,000. So, if you earn Sh100,000, deductions only apply up to that Sh72,000 ceiling.
In short: Everyone pays into Tier 1. Only those earning above KSh 8,000 also pay into Tier 2. No deductions are made on anything over KSh 72,000.
Now you know where that NSSF line on your pay slip is going!
5. How to check your NSSF contributions
It's important to stay updated on your contributions to ensure your savings are growing. Here's how you can check:
You can visit your nearest NSSF branch with your ID and NSSF number. They will check for you and give you an update.
Online portal: Visit https://selfservice.nssf.or.ke and log in or create an account.
Through SMS. Send "NSSF (NSSF Number)" to 6773, although standard SMS charges will apply.
Via the NSSF mobile app. You can download the app and register using your NSSF number.
Whether employed or self-employed, registering with NSSF is a smart and necessary step to securing your financial future.