Kenyans should prepare for increased deductions from their National Social Security Fund (NSSF) starting next month, according to a recent government announcement.
The deductions which will commence in February 2024, will see NSSF deduct between Ksh 420 and Ksh 1,740 from employees’ pay-slips.
According to the revised rates, the lower earnings limit that are considered the minimum pensionable salary, has been raised to Ksh 7,000, up from the existing Ksh 6,000. Employees falling into this category will now contribute Ksh 420, up from Ksh 360.
Simultaneously, the Upper Earnings Limit has been elevated to Ksh 29,000 up from Ksh 18,000.
Consequently, most workers will now be required to contribute Ksh 1,740, compared to the previous Ksh 1,080. Employers will also be required to match each contribution.
These rates will persist until the subsequent review scheduled for January 2025. The revised deduction plan, initiated last year, will incrementally raise rates over a five-year period.
The transition began in 2013 with the enactment of the NSSF ACT, which mandated a six percent monthly deduction from workers’ salaries. Although the implementation of the new contribution rates was anticipated in 2014, a prolonged legal battle delayed the process.
The Court of Appeal granted approval for the new deductions in a September 2022 ruling, enabling NSSF to commence the revised deduction scheme last year. The initial step involved setting the Lower Earnings Limit at Ksh.6,000 and the Upper Earning Limit at Ksh.18,000, communicated through a public notice in January last year.
According to a table from the NSSF Act 2013 outlining the progression of deductions in subsequent years, the lower earnings limit for 2025 is projected to increase to Ksh.8,000.
Additionally, the upper earnings limit is expected to rise to twice the national average earnings, aiming to enhance savings for Kenyans.
For the lower earnings limit, the new rates will be gazetted by the Labour CS from the fifth year, based on the minimum monthly wage at that time.
