Case filed challenging gov't plan to increase NSSF deductions

City lawyer John Maina Ndegwas has filed a case at the Milimani Law Courts challenging the new National Social Security Fund (NSSF) deductions that are to take effect next month.

The lawyer says that the economic outcome of the said implementation will impact negatively on the economy of Kenya because more employers will have to declare their workers redundant due to the increased running costs of maintaining their employees.

“The said proposed deduction from the employees are coming at a time when Kenyans are inebriated with the high cost of living with a shrinking pay slip because of a depressed economy,” reads the petition.

He now wants the court to certify the matter as urgent and issue a temporary order restraining the board of NSSF from implementing the contribution rates for 2024.

“The 3rd schedule of the NSSF Act 2013  spells clearly the amount chargeable within the first four years after the commencement of the Act on 10th January 2014 yet the Board has failed to offer guidance to the employers on how to implement this causing confusion and anxiety in both public and private sectors of the economy of Kenya,” reads court papers

The new rates indicate that the lower earnings limit or the amount that is considered the lowest pensionable salary has been raised to Ksh.7,000 up from the current Ksh.6,000.

This category of employees will now contribute Ksh.420 from the current Ksh.360.

Subsequently, the Upper Earnings Limit has now been hiked to Ksh.29,000 from the current Ksh.18,000, meaning that most workers will contribute Ksh.1,740 up from Ksh.1,080. Each contribution will be matched by the employer, as has been the case.

The rates will remain in place until the next review in January 2025. The new deduction plan, which began last year, will gradually increase rates over five years.