Kenya NSSF Contribution Rates: Update on the May 2026 Court of Appeal Ruling

Overview

On 29 May 2026 the Court of Appeal refused to pause enforcement of the 2022 Employment and Labour Relations Court (ELRC) judgment that had declared the NSSF Act, 2013 unconstitutional. Almost in the same breath, NSSF told employers to carry on paying the enhanced rates and to ignore any suggestion that the old KES 200 flat monthly contribution is back in force. The regulator and the courts are now sending opposite signals, and employers are the ones left to reconcile them.

Dispute Background

The NSSF Act, 2013 came into force in January 2014, replacing the flat KES 200 monthly contribution with a 12% levy on pensionable pay, split evenly between employer and employee. It was suspended almost immediately once constitutional challenges were filed, and those petitions were eventually consolidated before the ELRC.

● September 2022 — The ELRC declared the Act unconstitutional and void, citing conflict with competition law, the forcing of contributions on people already enrolled in other pension schemes, and process failures such as leaving the Senate out of a bill with county-finance implications.
● February 2023 — The Court of Appeal set that judgment aside, ruling that the ELRC had never had jurisdiction over the case.
● February 2024 — The Supreme Court reversed the Court of Appeal, confirmed the ELRC did have jurisdiction, and sent the underlying appeal back for a full hearing on the merits — which effectively put the ELRC’s 2022 finding back in force pending that hearing.

The constitutional question itself is still awaiting a full hearing at the Court of Appeal. The May 2026 ruling dealt only with a narrower question: whether enforcement of the ELRC judgment should be paused in the meantime.

What each side argued

NSSF’s position was that the ELRC had wrongly treated the fund as a social-assistance programme rather than a contribution-based pension scheme, and that letting the judgment stand would open up a governance and operational vacuum — threatening the informal-sector “Haba na Haba” scheme, freezing statutory grants, and causing investment losses that a later win on appeal couldn’t reverse.

The other side countered that the earlier interim orders, together with the old Cap 258 Act, were enough to cover any gap; that NSSF hadn’t backed up its warnings with hard evidence such as audited accounts or transaction records; and that pausing the judgment would, in effect, shield a law the courts had already found unconstitutional.

The Court of Appeal agreed the underlying appeal has merit, but found NSSF hadn’t shown that going ahead without a pause would make that appeal pointless, and noted the older statutory framework remained available as a fallback. The application to pause enforcement was dismissed.

 

Developments after the ruling

● NSSF has publicly instructed employers to keep remitting at the enhanced rates and to disregard any reading that points back to the KES 200 framework, maintaining that the pending appeal has no bearing on the rates currently in force.
● NSSF’s own lawyers have separately asked the Court of Appeal to withdraw and expunge its 29 May ruling, arguing the court ruled on an application that wasn’t properly — or perhaps no longer — before it.

 

Reading the legal position against what’s actually happening

Taken strictly, the logic cuts the other way from what NSSF is telling employers: with no pause in place, the ELRC’s finding that the 2013 Act is unconstitutional remains the binding position, which points toward falling back on the KES 200 regime under the old Cap 258 Act.

That isn’t what’s happening in practice, though. Most employers kept paying the enhanced rates even after the 2024 Supreme Court decision, and NSSF continues to enforce them administratively. That gap between the technical legal position and what’s actually being enforced is the real problem — it leaves employers exposed no matter which way they lean, until the courts settle two things: which statutory framework governs in the interim, and what legal status the enhanced rates actually have.

 

Practical takeaway

Because paying more benefits employees in the meantime, the more defensible course for now is to keep remitting at the enhanced rates, keep clear documentation of the reasoning behind that choice, and track the litigation closely rather than switching frameworks pre-emptively.