Common questions you will get as a HR on NSSF
Last month the government announced the surge in NSSF contribution rates. As expected, the news was poorly received because it meant that employees all over the country had to pay a significant sum of money toward this organization. The thing is, there are individuals who do not fully understand why they pay NSSF in the first place. At the same time, there are employers who have not registered with NSSF altogether. As a HR, there are common questions you will get on NSSF from both employees and employers.
But first, what exactly is NSSF?
What is NSSF?
The National Social Security Fund is a government agency based in Kenya that is charged with the registration of members, receiving their contributions, safeguarding, managing and investing the funds within the scheme (either in government securities, shared equities or real estate), processing these funds and eventually offering eligible dependents or members payout benefits. The main objective of NSSF is to provide Kenyans with financial security upon retiring.
The NSSF fund is both a provident fund and pension fund. Now, pension funds normally have a significant amount of money to invest and many investors from private and public firms. An individual can either receive pension funds as a monthly income, income drawdown (this is where you get pension income once you retire and still leave your money in the pension fund to grow), income, or lump sum payment. Provident fund, on the other hand, can only be received by a beneficiary as a cash lump sum with interest on the savings in the pension fund account.
So basically, NSSF is how your employees will be able to retire in style and well, secure their future financially.
Now that we know what NSSF is, let’s examine some of the questions you will get as a HR professional on NSSF,
1) Is NSSF mandatory in Kenya?
All employers within the country are required by law to register with NSSF. This is regardless of whether an employer has satisfactory social security or pension schemes. In fact, the law dictates that all employers are required to register their employees within the first 21 days of their employees’ employment.. Failure to do so is an offense that can lead to an employer being prosecuted in the Court of Law. As a HR professional, a part of your duty involves ensuring that your company meets all the statutory requirements mandated by the government- NSSF is one of them.
Also, it is important to note that both employees and employers in both informal and formal sectors are required to contribute to the NSSF fund. Every individual above 18 years old in Kenya is eligible to become a member with NSSF.
However, if you happen to run into a person that is self-employed, registering with NSSF is voluntary and not mandatory.
2) What are the penalties for not paying NSSF?
We know that it is illegal for an employer to not register with NSSF but what exactly are the consequences of this action?
Every employer who fails to register their employees with the fund is required to pay a fine of ksh50,000.
Both employees and employers are advised by NSSF to contribute to the fund on the 9th of every month. Failure to do so does attract a penalty of 5% on the total contributions for every month or the section of the month that is remitted late.
3) How much is NSSF per month in Kenya?
It is important to note that both employees and employers contribute to an employee’s NSSF fund. This virtually means that if an employee is contributing X amount of money to the fund, the law requires employers to match this figure. If an employee decides to contribute more than the government mandated amount, the employer is not required to match this figure.
Up until the end of January, employees in Kenya were required to contribute ksh200 monthly to their NSSF funds account. This changed in February when President William Ruto announced that there will be a surge in the amount of contributions channeled to this organization. According to the president, raising NSSF deduction rates is a way of increasing the country’s savings and fighting its debt. Presently, employees are required to contribute 6% of their income to the fund with of course, their employers matching this increased figure.
The law now requires a maximum contribution of ksh2,160 monthly from employees who are earning more than ksh18,000 per month.
4) How can I get my NSSF number online in Kenya?
An employee can get their NSSF number via SMS. All they need to do is type;
- “NSSF number”
- Their date of birth
- Their full name in CAPS
Remember to tell your employees to leave a space between each detail provided. After availing all these details they can send them to 6773.
Alternatively you can dial the USSD code *303# and select option 5. After providing the required details, you will be able to check your NSSF number.
5) How can I check my NSSF balance in Kenya?
You can advise your employees to check their NSSF balance online by using the USSD code *303#. Through this option, they will be able to get their NSSF statement.
Alternatively, your employees can access their NSSF statements via the NSSF self-service portal. It is important to note, however, that they need to register with the online portal first in order to access this service.
6) Can I withdraw my NSSF money before retirement?
An employee is eligible for NSSF payout benefits when;
- They retire
- They reach 55 years of age
- They exceed the age of 50 and they are no longer employers
How ElevateHR can help you ensure that you remain compliant when it comes to statutory deductions
Let’s face it, as a HR, ensuring that your company is compliant with all the statutory requirements mandated by the government can be hectic especially around this time of the month- payroll season.
Through our platform you can seamlessly manage your employees’ NSSF deductions and benefits. In addition to this, you can get an elaborate report on the statutory deductions that you can share with your employers.
ElevateHR can be your lighthouse in the dark woods. This platform is dedicated to making your work effortless, accurate and timely.
To learn how you can automate NSSF deductions and reports as you run payroll, request for a demo here.
Product Marketing Lead Fellow - Rewriting the African tale| Creative Writer| Product positioning|