Kenya | NSSF Tier 2 Contracted Out

Kenya | NSSF Tier 2 Contracted Out

Tier 2 contributions are in respect of Pensionable Earnings between the Lower Earnings Limit (KSh 7000) and the Upper Earnings Limit (KSh 36 000) and shall be credited into a Tier 2 account.
Tier 2 contributions can be paid to a private pension scheme upon an Employer making an application to contract out of NSSF and obtaining approval from the Retirement Benefits Authority.

Once employer has obtained approval from the authority to contract out of NSSF Tier 2, to contract employees out on Payspace, Navigate:
Employee> Basic Profile> Statutory Fields

Enable the below settings.
      

Once the setting has been enabled, the below NSSF tier 2 components will be suppressed and will not calculate on the employee's payslips.
  1. NSSF Tier 2 Contribution Employee
  2. NSSF Tier 2 Contribution Employer
  3. NSSF Income Tier 2
The below components will also have to be added onto the employee's recurring payroll components once the above field has been ticked.
  1. NSSF Contracted Out Tier 2 Income
    Tax Code: NSSFI2
    Payslip Action: Notes
    Once this component is added, define the income base as per pension fund rules.

  2. NSSF Contracted Out Tier 2 Employee
    Tax Code: NSSFEE2
    Payslip Action: Deduction
    Define the percentage or advise the amount as per pension fund rules.
    This component will be included in the component total allowable where the statutory limit will be applied. 

  3. NSSF Contracted Out Tier 2 Employer
    Tax code: NSSFWE2
    Payslip Action: Company Contribution
    Define the percentage or advise the amount as per pension fund rules. 


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