A consumer lobby has moved to court seeking to stop the National Social Security Fund (NSSF) from enforcing enhanced pension contributions, escalating a legal dispute surrounding the Sh715 billion retirement scheme.
The Consumers Federation of Kenya (Cofek) argues that the Fund’s latest directive has deepened uncertainty over mandatory payroll deductions affecting millions of workers and employers.
Cofek has filed a constitutional petition in Nairobi accusing NSSF of issuing directives that could expose workers and employers to financial liability despite confusion arising from a recent Court of Appeal ruling.
The case adds a fresh twist to the legal battle over the NSSF Act, 2013, which raised monthly pension contributions from a flat Sh200 to as much as Sh4,320, matched by employers.
At the centre of the dispute is a public notice issued by NSSF on June 5 directing employers and workers to continue remitting enhanced contributions under the current framework.
The fund advised employers and stakeholders to ‘disregard the misleading opinions alluding to reverting contributions to Sh200’ and maintain existing deductions, saying pending proceedings before the Court of Appeal did not affect the enhanced rates.
‘Monumental error’
The directive followed a May 29 Court of Appeal ruling dismissing NSSF’s application seeking to suspend a 2022 Labour Court judgment that had declared the NSSF Act, 2013 unconstitutional.
That ruling triggered confusion after NSSF and the Central Organisation of Trade Unions (Cotu) argued that the appellate judges had determined an application that was no longer before the court.
In a June 2 letter to the Court of Appeal Registrar, Senior Counsel Fred Ngatia, acting for NSSF, described the decision as a ‘monumental error’.
‘We write to express our client’s profound disbelief and bewilderment arising from the monumental error therein and which has caused confusion in the pension sector,’ Mr Ngatia wrote.
According to the letter, the application seeking a stay of the Labour Court judgment had ceased to exist as a live issue after the Court of Appeal delivered its substantive judgment in February 2023.
NSSF argued that the matter argued before judges in January 2025 concerned an application by a union seeking joinder as an interested party, not the 2022 stay application.
‘In plain terms, the court purported to determine a motion which was neither before them nor was a live issue at all,’ Mr Ngatia wrote. ‘A monumental error by any account.’
Cotu secretary-general Francis Atwoli backed that position.
‘The application for stay of execution filed in October 2022 was conclusively overtaken by events upon delivery of that judgment and was no longer a live controversy capable of determination,’ Mr Atwoli said.
Fresh challenge
Against that backdrop, Cofek argues that NSSF’s directive has compounded uncertainty rather than resolved it.
‘The impugned notice has the effect of influencing and directing the conduct of employers, employees and payroll administrators throughout the Republic in relation to mandatory statutory deductions from wages and salaries,’ the petition states.
The federation says the notice affects ‘millions of Kenyan workers and contributors on a recurring monthly basis’ because employers continue processing payroll while employees continue to have deductions made from their earnings every month.
Cofek argues that workers, employers and consumers are entitled to ‘accurate, reliable and consistent information concerning statutory deductions affecting wages, salaries and employment earnings.’
Cofek is seeking conservatory orders restraining the Fund from imposing penalties, surcharges, sanctions or other enforcement measures arising from the disputed advisories.
It also wants the High Court to compel NSSF and the Labour ministry to publish a fresh public notice informing employers and contributors that the dispute remains before the courts and that no adverse action should be taken against those relying on existing guidance.
The federation says the NSSF notice raises constitutional questions about whether public authorities can issue advisories and directives capable of achieving outcomes they did not secure through judicial proceedings.
‘The petition therefore raises substantial constitutional questions as to whether the first respondent may, through administrative notices, directives and public advisories, procure or take actions’ contrary to constitutional principles, the court documents state.
The respondents had not filed responses to the latest allegations by the time the petition was filed.