Summary
Brace for impact as the Kenyan government announces higher NSSF deductions next month. With adjusted limits, employees earning Ksh.7,000 will contribute Ksh.420, while those earning Ksh.29,000 will contribute Ksh.1,740. The rates, effective until January 2025, follow a gradual five-year increment plan initiated in 2013, with questions lingering about incorporating the increased minimum wage into future rates.
Kenyan workers are set to face heightened National Social Security Fund (NSSF) deductions as the government unveils adjustments for next month. The changes, detailed in a document seen by Topnews.co.ke, impact both lower and upper earnings limits.
The lower earnings limit, representing the minimum pensionable salary, sees an increase from Ksh.6,000 to Ksh.7,000. Employees in this category will now contribute Ksh.420, up from the previous Ksh.360.
Simultaneously, the Upper Earnings Limit experiences an elevation from Ksh.18,000 to Ksh.29,000. As a result, most workers will witness their contributions climb from Ksh.1,080 to Ksh.1,740. Employers will continue to match these contributions, maintaining the existing practice.
These adjusted rates are slated to be in effect until the next review in January 2025. The new deduction plan, implemented last year, is part of a phased five-year increment strategy that began in 2013 with the introduction of the NSSF Act. This legislation mandated a six percent deduction from workers’ salaries each month.
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Anticipated to take effect in 2014, the new contribution rates faced delays due to a prolonged legal battle. However, in September 2022, the Court of Appeal granted approval for the deductions, enabling NSSF to implement the updated scheme in the previous year.
The initial phase involved setting the Lower Earnings Limit at Ksh.6,000 and the Upper Earnings Limit at Ksh.18,000. This information was communicated through a public notice in January of the same year.
Looking ahead, a table from the NSSF Act 2013 outlines the projected progression of NSSF deductions. It suggests that by 2025, the lower earnings limit could rise to Ksh.8,000, with the upper limit reaching twice the national average earnings, aimed at enhancing savings for Kenyan workers.
However, questions have arisen regarding the impact of the current minimum wage on these calculations. The initial lower earnings limit of Ksh.6,000, established in the previous year, was based on the 2013 minimum wage. With subsequent increases in the minimum wage, uncertainty prevails over whether this will be considered in determining future NSSF rates, as the organization and the Ministry of Labour make decisions moving forward.