Are you a young entrepreneur looking to venture into corporate business? Or perhaps an HR professional seeking clarity on NSSF obligations? This comprehensive guide will walk you through everything you need to know about NSSF (National Social Security Fund) registration requirements in Kenya.
Once a company is approved, it needs to register with KRA to pay taxes, NHIF to provide medical coverage for employees, and NSSF for their retirement benefits. All these are free of charge and only take two weeks to process. They are compulsory requirements for bidding on government tenders and some private tenders.
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.
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National social security fund Nssf is a body established under the national social security fund act on 45 of 2013. National social security fund provides social security advantages to Kenyan citizens, Benefits like survivor benefits, retirement benefits and invalidity benefits.
Nssf is a Kenyan agency responsible for collection, responsible investment, secure keeping and distribution of retirement benefits of employees in both informal and formal sectors of the Kenya economy. Nssf is participated by the employer and employees where it’s compulsory for both parties, the contributions are both provident fund and pension fund.
Nssf registers new members, receives their contribution, manages funds, and processes pay out benefits to eligible members. Nssf was established in 1965 through parliament act on chapter 258 of the law of Kenya. In 1987 Nssf operated as a department of the ministry of labor, until the Nssf Act transformed the fund into a state corporation under management of the board of trustees.
This will ensure guaranteed basic compensation in case of permanent disability, the act establishes the provident fund and pension fund to provide contribution of funds to and payments of benefits. Kenyans who are 18 years and above are employed or self-employed.
Common Questions About NSSF
Let’s examine some of the questions you will get as a HR professional on NSSF:
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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.
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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”
- “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
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NSSF Self-Registration Portal
Government has improved its ways to access public services through online platforms .Members can apply for NSSF through a self-service portal. Registered and qualified NSSF members can withdraw their savings, they can submit and claim their benefits online using their mobile phones. NSSF retirement benefits exist in two funds, pension and new provident fund.
The National Social Security Fund (NSSF) in Kenya recently launched a self-registration portal, aiming to streamline the process for new members. Initial Impressions The initial interface was clean and visually appealing. The instructions were generally clear and concise, guiding me through the various steps. I appreciated the option to complete the registration from the comfort of my living room, and being the non-outside person that I am, this was an easy ten points for the step.
Common Issues and Suggestions for Improvement
The Roadblock: Country and County Codes No sooner had I started cruising through the registration than I encountered a significant hurdle. Inputting the country and county names returned an error. NOT FOUND. As I would later come to learn, the requirement was to input country and county codes for slot selection.
While seemingly minor, this presented an unexpected challenge. These codes are not readily available information and required me to spend considerable waiting and hoping for the drop-down menus to show. This delay, exceeding 30 minutes, significantly impacted my overall user experience.
Suggestions for Improvement:
- Provide a lookup feature: Optimising the dropdown menu appearance times or a search bar for selecting country and county would significantly enhance usability. This would allow users to easily locate their locations without the need for exaggerated wait times.
- Display codes within the portal: Consider displaying a list of available country and county codes within the registration form itself, making the information readily accessible to users.
- Offer alternative input methods: Allow users to enter their full location name and have the system automatically populate the corresponding codes.
Overall Experience: Despite the aforementioned issue, I found the overall registration process to be relatively user-friendly. The portal has the potential to be a valuable tool for streamlining NSSF membership. By addressing the concerns raised, the NSSF can further enhance the user experience and encourage greater adoption of the self-registration platform.
KRA PIN Registration
A KRA pin is required for various business activities, including opening a bank account, filing KRA monthly returns, applying for a Tax Compliance Certificate (TCC), bidding for government tenders, and even purchasing land or property. Therefore, it's important for every company in Kenya to register for a KRA pin as soon as possible. The process for registering a KRA pin for your company in Kenya is relatively easy and can be done online.
Once you are on the Itax online service area, you will see a link to apply for a new pin. Follow the link provided, and you will be directed to the e-registration portal. Here, you will be asked to select your taxpayer type. You will then be prompted to choose between the online mode or the upload mode. Pick the online mode as you will be completing your KRA pin registration for your company online.
Select your business type from the dropdown list. Choose the accounting period end month. This is when you should file your annual company returns, failure to which fines are applied. Move on to the principal physical address sub-section. Enter details such as L.R number, building, street or road, city or town, county, district, tax area or locality, and descriptive address.
Next is the principal postal address sub-section, where you should fill in details about your postal code, town, and P.O. Box. Enter details of the company's ownership structure in the new sub-section. Enter bank account details if you want to declare them for tax refunds. In the economic activity details sub-section, enter details about the sector of the economy you are involved in, division, group, class, sub-class, and type. It does not limit you to any sector.
In the details of the acquisition or amalgamation sub-section, select "Yes" or "No" to indicate whether your business was formed as a result of acquisition or amalgamation. First, complete the ‘Taxpayer Obligation’ section. Here, you'll need to provide details about your Income Tax Company, Income Tax Partnership, or Income Tax PAYE (for employers only). Failure to file your VAT return on time will result in a penalty of 5% of the tax due or Kshs. 3. If you decide to register for VAT, you'll be prompted to enter your turnover details, which include the amount of taxable supplies in Kenya, the amount of exempt supplies in Kenya, and the amount of exports. 4. Click on ‘Next’ to proceed to the next page. Start by entering their pin, the nature of their association, and their profit or loss sharing ratio - these are all required fields. To complete sub-section E-I, provide the details of your authorized tax agent who will submit applications on your behalf. For subsection E-II, provide details of the intermediary agent who will submit tax returns on your behalf.
Congratulations, you are now a registered taxpayer! The online Itax system has made KRA pin registration easy and accessible for new taxpayers, including companies. The process of filing nil company returns will be covered in a separate article with the help of an expert due to its sensitivity. For now, let's focus on the registration process for NSSF and NHIF employers.
NHIF Registration
Once you have submitted all the required documents at your nearest NHIF office, you will be given an Employer Code number. This code will be used to remit all NHIF deductions. An NHIF compliance certificate will be issued after the registration process is complete.
NSSF Compliance Certificate
Once your registration is complete, you will receive an NSSF Compliance Certificate which proves your compliance with NSSF regulations.
How ElevateHR Can Help
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.
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tags: #Kenya
