Gov't to introduce higher NSSF deductions in February

Kenyans will have to brace for higher National Social Security Fund (NSSF) deductions starting next month.

Beginning February, NSSF will hive off between Ksh.420 and Ksh.1,740 from workers’ pay-slips.

A document seen by Citizen TV detailing the new rates indicates 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, that began last year, will gradually increase rates over a five-year period.

This shift began in 2013 when the NSSF ACT came into play, requiring six percent of workers’ salaries be deducted each month.

It was expected that the new contribution rates would take effect in 2014, but that was stalled in a nearly decade-long court battle that challenged the new deductions.

The Court of Appeal however gave the green light for the new deductions in a judgement delivered in September 2022.

This then paved way for NSSF to start the new deduction scheme last year. Its first order of business was setting the Lower Earnings Limit at Ksh.6,000 and the Upper Earning Limit a Ksh.18,000. This was communicated via a public notice in January last year.

A table from the NSSF Act 2013 illustrating the progression of NSSF deductions for subsequent years indicates that lower earnings limit for 2025 will likely increase to Ksh.8,000, with the upper earnings limit set to go up to twice the national average earnings in order improve saving for Kenyans.

For the lower earnings limit, from the fifth year the Labour CS would gazette the new rates based on what the minimum monthly wage will be at the time.

There have been questions, however, as to how the current minimum wage comes into play. This is because the lower earnings limit of kSH.6,000, that was set last year, was based on the minimum wage back in 2013.

With minimum wage having increased since then, it remains to be seen if this will be factored in as NSSF and the Ministry of Labour determine the rates moving forward.