Court ruling sparks confusion over NSSF contribution rates

A recent Court of Appeal decision declining to suspend a 2022 Employment and Labour Relations Court (ELRC) judgment declaring key parts of the National Social Security Fund (NSSF) Act, 2013, unconstitutional has sparked widespread confusion among employers, employees, and stakeholders regarding mandatory contribution rates.

The ELRC judgment of September 19, 2022, in the consolidated petitions led by the Kenya Tea Growers Association and others (with COTU and FKE as interested parties), struck down significant provisions of the NSSF Act, 2013. 

Grounds included inadequate public participation, lack of Senate involvement (as it affected county governments), violations of competition laws, and conflicts with existing retirement benefits frameworks.

In February 2024, the Supreme Court ruled that the ELRC had jurisdiction to hear the constitutional issues and remitted the matter to the Court of Appeal for determination on the merits.

On May 29, 2026, a three-judge bench of the Court of Appeal dismissed NSSF’s application for conservatory orders/stay pending the substantive appeal. 

The court found the appeal arguable but ruled that NSSF failed to demonstrate that the appeal would be rendered nugatory without a stay.

It noted that the old NSSF Act (Cap. 258) would fill any legislative void, as the Fund had operated under it successfully for years, and no sufficient evidence of systemic destabilisation was provided.

This procedural ruling has left the 2022 ELRC declaration in force for now, creating uncertainty over whether enhanced contributions (phased increases under the 2013 Act’s Third Schedule can continue or if rates revert to the old Cap. 258 levels of Sh200 for every employee with a matching contribution from the employer.

Legal experts and commentators have highlighted the narrow scope of the May 2026 ruling. 

Former Law Society of Kenya (LSK) President Faith Odhiambo welcomed it, stating it reaffirms that constitutional violations cannot be overlooked for administrative convenience. 

She noted the court applied the standard Rule 5(2)(b) test for stays, requiring both an arguable appeal and risk of nugatory effect.

Analyses from law firms and observers emphasise that the Court of Appeal did not validate enhanced rates or finally determine the Act’s constitutionality. 

Instead, it maintained the status quo of the ELRC judgment being enforceable, with Cap. 258 applying in the interim until the substantive appeal or further direction from higher courts. Some describe NSSF’s post-ruling communications as potentially overstating certainty around current (enhanced) rates.

NSSF has issued clarifications insisting the 2013 Act remains operational, citing a February 3, 2023 Court of Appeal judgment and arguing that pending matters do not affect the current contribution cycle (Year 4 under the Third Schedule). 

CEO/Managing Trustee David Koross urged employers and employees to continue remitting at enhanced rates, warning that failure to comply risks penalties and loss of accrued benefits for members. 

The Fund highlighted its growing asset base (around Sh715 billion as of March 2026) and strong investment returns as evidence of stability.

NSSF maintains it will comply with court decisions while protecting members’ savings.

The Central Organisation of Trade Unions (COTU-K), through Secretary General Francis Atwoli, has strongly backed full implementation of the NSSF Act, 2013. 

COTU has criticised the Federation of Kenya Employers (FKE) for what it calls misleading narratives on payslips and take-home pay, accusing employers of downplaying long-term retirement benefits and attempting to evade matching contributions. 

Atwoli emphasised that social security is a worker’s right under Article 43 of the Constitution and urged FKE to “keep off workers’ issues.” COTU supports advancing a robust pension system for both formal and informal sectors.

The substantive appeal before the Court of Appeal continues, with potential for further escalation to the Supreme Court.

Employers and employees are advised to seek professional legal or financial advice for compliance amid the evolving situation, as penalties for non-remittance may still apply depending on interpretation. Stakeholders await clearer judicial guidance to resolve the impasse.