Win for workers as court rejects NSSF’s bid to keep deducting more money from employees
The Court of Appeal has dismissed an application by the National Social Security Fund (NSSF) seeking to suspend a judgment that declared the NSSF Act 2013 unconstitutional, dealing a fresh blow to the Fund’s efforts to preserve the controversial law that introduced significantly higher pension deductions for Kenyan workers.
In a ruling delivered on May 29, 2026, a three-judge bench comprising Justices Wanjiru Karanja, Kathurima M’Inoti and Pauline Nyamweya declined to grant stay orders sought by the NSSF Board of Trustees pending the hearing of its substantive appeal.
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The application arose from a September 19, 2022 judgment by the Employment and Labour Relations Court (ELRC), which declared the NSSF Act, 2013 unconstitutional, null and void.
The ELRC found that the law was enacted without the participation of the Senate despite having implications on county governments, unfairly favoured NSSF over private pension schemes, improperly transferred powers belonging to the Salaries and Remuneration Commission, and unjustifiably compelled workers to contribute to NSSF even where they already belonged to superior pension arrangements.
Seeking to overturn that decision, NSSF argued that the judges had misunderstood the nature of the Fund by treating it as a social assistance programme under Article 43(3) of the Constitution rather than a contributory pension scheme for employed and self-employed persons.
NSSF defence
The Fund also maintained that the Senate had no role in the legislation because social security is not a devolved function.
NSSF further warned that the judgment could create a governance crisis, affect management of the Fund and jeopardise billions of shillings collected under the enhanced contribution regime.
It claimed that reverting to the old NSSF framework would reduce monthly contributions to Ksh200 from employees matched by Ksh200 from employers, significantly lowering national pension savings.
The court, however, found that while NSSF had raised arguable issues worthy of consideration on appeal, it had failed to demonstrate that it would suffer irreparable harm if the stay was denied.
“Apart from frequently repeating the assertion of likely destabilisation and the inability of the applicant to perform its functions due to the legal lacuna, the applicant provided no evidence,” the judges stated.
Previous NSSF law
The court also noted that the previous NSSF law, Cap 258, remained operational and continued to provide a legal framework for contributions, undermining NSSF’s argument that a legal vacuum would arise.
Under the older law, NSSF contributions were fixed at Ksh200 from the employee and Ksh200 from the employer every month, totalling Ksh400.
The NSSF Act, 2013, introduced a phased contribution structure based on workers’ earnings, leading to substantially higher deductions. For many salaried employees, the new system resulted in monthly deductions running into thousands of shillings.
The ruling does not finally determine the legality of the enhanced deductions because the substantive appeal is yet to be heard. However, it means NSSF has failed in its attempt to suspend the 2022 judgment pending the appeal.
The decision is the latest development in a legal battle that has lasted more than a decade. In February 2024, the Supreme Court ruled that the ELRC had jurisdiction to hear the constitutional challenge against the NSSF Act, 2013 and directed the Court of Appeal to determine the appeal on its merits.
The Court of Appeal has now held that NSSF’s appeal raises legitimate legal questions, including whether the Senate ought to have participated in the enactment of the law and whether the trial court misunderstood the nature of social security.
