FKE Directs Employers to Continue Enhanced NSSF Deductions Despite Ongoing Court Battle

FKE Directs Employers to Continue Enhanced NSSF Deductions Despite Ongoing Court Battle

NAIROBI, Kenya – The Federation of Kenya Employers (FKE) has advised employers across the country to continue deducting and remitting National Social Security Fund (NSSF) contributions at the enhanced rates introduced under the NSSF Act, 2013, despite a recent court ruling that declared the law unconstitutional.

The guidance, issued on Friday, June 12, comes amid growing uncertainty among employers, payroll managers, and employees following a Court of Appeal decision that declined to suspend an earlier judgment challenging the legality of the NSSF Act, 2013.

While the ruling sparked debate over whether employers should revert to the previous contribution rates, FKE has maintained that the prudent course of action is to continue applying the current rates until the matter is fully determined by the courts.

“FKE advises members that since the matter has not been conclusively determined in the Court of Appeal, it would be prudent for them to continue deducting and remitting the new rates prescribed by the NSSF Act, 2013,” the employers’ organization stated.

Employers Warned Against Reverting to Old Rates

The Federation cautioned that reverting to the former contribution framework, where employees contributed Ksh200 per month, could create significant legal, financial, and administrative complications.

According to FKE, employers who prematurely abandon the enhanced contribution structure risk exposing themselves to future liabilities should the courts ultimately uphold the NSSF Act.

“Reverting to pre-2013 rates at this stage will cause more problems for employers. FKE respectfully urges the Court of Appeal to clear the air on this contentious ruling,” the Federation noted.

The organization further encouraged employers to maintain detailed payroll records and documentation to demonstrate compliance and good faith while awaiting a final determination from the judiciary.

Court Ruling Creates Uncertainty

The latest confusion stems from a Court of Appeal ruling delivered on May 29, 2026, in which judges declined an application by NSSF seeking to suspend a previous judgment that declared the NSSF Act, 2013, unconstitutional.

The appellate judges acknowledged that NSSF had raised substantial legal questions worthy of consideration but ruled that the Fund had failed to demonstrate that denying the stay order would cause immediate and irreparable harm to the pension sector.

According to the court, NSSF did not provide adequate evidence, including audited financial statements and actuarial assessments, to support claims that invalidating the law would threaten the stability of Kenya’s pension system.

The judges also observed that pension contributions had historically been collected under the previous legal framework without evidence of systemic collapse or governance failures.

The ruling has since generated widespread debate regarding the status of contribution rates and the obligations of employers pending the conclusion of the appeal.

NSSF Maintains Current Rates Remain in Force

Despite the legal setback, NSSF has continued to insist that the enhanced contribution rates remain applicable until a final court determination is made.

In a statement issued on June 5, the Fund directed employers to continue remitting contributions under the current framework, arguing that ongoing court proceedings do not invalidate existing operational requirements.

“The ongoing court proceedings do not affect the contribution rates currently being remitted by employers and employees,” NSSF stated.

The Fund maintains that compliance remains mandatory and that employers should continue processing deductions as prescribed under the current system.

What the Enhanced Contributions Mean

The NSSF Act, 2013, introduced a gradual increase in monthly pension contributions from both employees and employers as part of broader reforms aimed at improving retirement savings for Kenyan workers.

Supporters of the reforms argue that higher contributions will strengthen retirement security and reduce dependency among retirees. Critics, however, have raised concerns over the increased cost burden on employers and employees, particularly during periods of economic strain.

The ongoing legal dispute has therefore become one of the most closely watched labour and social security cases in Kenya, with significant implications for millions of workers and thousands of businesses.

As the appeal process continues, employers are now caught between legal uncertainty and regulatory compliance requirements. For now, FKE’s position aligns with that of NSSF: maintain the enhanced contribution rates until the courts provide a definitive ruling on the future of the NSSF Act, 2013.

The outcome of the case is expected to shape Kenya’s pension landscape for years to come, potentially affecting retirement savings, employer obligations, and social security policy across the country.

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FKE Directs Employers to Continue Enhanced NSSF Deductions Despite Ongoing Court Battle