NAIROBI, Kenya – Salaried Kenyans are bracing for the increased deductions for the National Social Security Fund (NSSF) beginning February 1.
The contributions are set to double the current rates under the NSSF Act of 2013 for both the employee and employer.
The contributions will increase to 6% of an employee’s salary, matched equally by employers moving the minimum contribution from KSH420 to KSH480.
Those in higher income brackets will increase their contribution from the current KSH2,160 to KSH4,320.
The new upper-income limit will also double from KSH36,000 to KSH72,000, with the lower limit rising to KSH8,000 from KSH7,000.
Deductions to double as fund adjusts contributions the-star.co.ke/news/2025-01-1…
Employees earning above KSH72,000 will be hit more by the changes as their contributions will increase significantly.
Since its establishment in 1965, the NSSF had a fixed contribution rate of KSH200 from both employers and employees.
However, under former President Uhuru Kenyatta’s administration, various reforms were initiated with the aim of creating a progressive system that would enhance retirement savings.
The implementation of the revised contribution scheme was faced with various legal challenges, which delayed it to 2023.
The third phase of this rollout adds another financial strain on salaried workers, already burdened by other deductions.
Currently, employees contribute 2.75% of their salaries to the Social Health Insurance Fund (formerly NHIF), housing levy of 1.5%, and income tax (PAYE), whose rates can reach up to 35%, further squeezing take-home pay.
After all deductions are made, financial analysts estimate that employees earning KSH50,000 will now take home KSH39,000 while those earning KSH100,000 will now take home KSH72,000.
President Ruto has termed the system “fair, equitable, and progressive” and added that it will help the government raise KSH1 trillion by 2027.
Although the framework will help increase government revenue by a more significant margin, employers and workers have expressed their concerns about the added financial burden.
