More pain for Kenyans as government increases NSSF deductions.

Kenyans are set to dig deep into their pockets as the government unveils plans to increase NSSF contributions from next month (February).

In September 2022, the Court of Appeal approved the revised deductions and the Ministry of Labour is out to implement the same.

A new document from the Ministry of Labour details that all Kenyans will have to contribute between Sh420 and Sh1,740 from their monthly salary towards NSSF.

In the new proposals, the lowest pensionable salary has been increased from the current Sh6,000 to Sh7,000 – meaning employees in this bracket will contribute Sh420 from the current Sh360.

As a result, the upper earnings limit has been raised to Sh29,000 from Sh18,000, implying that the majority of workers will contribute Sh1,740 rather than Sh1,080. As previously stated, the employer will match each contribution.

The tariffs will be in force until the next review in January 2025. The new deduction plan, implemented last year, would gradually raise rates over five years.

This change began in 2013, when the NSSF ACT went into effect, requiring 6% of workers’ earnings to be withheld each month.

It was expected that the increased contribution rates would take effect in 2014. However, this was halted in a nearly decade-long judicial dispute that challenged the new deductions.

Employers are required to stay alert and take note of the newly published NSSF rates and ensure full compliance to avoid consequent penalties.

Remittance of NSSF contributions in Kenya was for a period governed by the National Social Security Fund Act, Cap 258 of the laws of Kenya of 1965.

This Act capped the contributions at Sh200 to be paid by both the employee and the employer.

There was a lower earnings limit (LEL) for employees who make less than Sh6,000, with an upper earnings limit (UEL) for employees who earn Sh18,000 or above.

The monthly matching contributions by both employees and employers rose from the current Sh400 to 12 per cent of a worker’s monthly pensionable income (6 per cent from the employee and 6 per cent from the employer – both contributing an equal amount), with a maximum contribution of Sh2,160 for workers earning more than Sh18,000 per month.

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