Octagon Africa has announced a roadmap to support employers in implementing the National Social Security Fund (NSSF) Act, 2013, ahead of the first remittance at the end of February 2023.
During a stakeholder engagement forum with various corporates, employers, county government officials, human resource executives and trustees and sponsors of retirement benefits schemes, the company presented a detailed framework to support employers with the contracting-out process of Tier II contributions.
On February 9th 2023, NSSF directed all employers to comply with the NSSF Act No. 45 of 2013, which increases the monthly contributions from Ksh200 to Ksh1,080 for employer and employee, each bringing that to a new monthly total of Ksh2,160. Employers are subsequently required to remit the monthly contribution to NSSF by the 9th of every month. However, employers who wish to remit Tier II contributions into a contracted-out scheme as provided under Section 21 of the NSSF Act may apply to the pensions’ regulator, Retirement Benefits Authority.
Section 18 (1) of the NSSF Act 2013 establishes a new Pension Fund and a Provident Fund. Under the Act, the deductions will be applied in different categories. The Upper Earning Limit (UEL) is for employees who earn Ksh18,000 and above, while the Lower Earning Limit (LEL) is for those who earn below Ksh6,000 for the first year, thereafter the figures for UEL & LEL will be reviewed based on the 5-year implementation plan as laid down in the Act.
Employees earning below Ksh6,000 will pay contributions in the Tier 1 category only. While employees whose earnings are between Ksh6,000 and Ksh18,000 will pay contributions in both Tier I and Tier II category.
Section 18 (1) of the NSSF Act 2013 establishes a new Pension Fund and a Provident Fund. Under the Act, the deductions will be applied in different categories. The Upper Earning Limit (UEL) is for employees who earn Ksh18,000 and above, while the Lower Earning Limit (LEL) is for those who earn below Ksh6,000 for the first year, thereafter the figures for UEL & LEL will be reviewed based on the 5-year implementation plan as laid down in the Act.
Employees earning below Ksh6,000 will pay contributions in the Tier 1 category only. While employees whose earnings are between Ksh6,000 and Ksh18,000 will pay contributions in both Tier I and Tier II category.
Octagon Africa Group CEO Fred Waswa, had this to say, “We are walking a journey with the employers to ensure a seamless compliance process. We have already engaged the regulator to ensure an accelerated process for employers who wish to remit Tier II contributions into contracted-out schemes. We have embarked on a 60-day stakeholder engagement with employers and stakeholders of retirement benefits schemes to deepen their understanding of this new Act and to support them with compliance.”
For a scheme to qualify to receive Tier II contributions as a “contracted out scheme” they are required to meet the Reference Scheme Test. The Authority shall issue a Reference Scheme Certificate to Schemes that have met the said qualifications.