Kenyan workers are set to experience a surge in National Social Security Fund (NSSF) deductions beginning next month. According to information obtained by TheAfricanWatch, the revised rates, scheduled to take effect in February, will see employees contributing between Ksh.420 and Ksh.1,740 directly from their pay-slips.
The adjustments come as part of a gradual increase in NSSF rates initiated last year, aiming to enhance social security benefits over a five-year period. The impending changes reflect amendments to both the lower and upper earnings limits. The lower earnings limit, previously standing at Ksh.6,000, has been raised to Ksh.7,000. Workers falling into this category will now contribute Ksh.420, up from the previous Ksh.360.
Concurrently, the Upper Earnings Limit has witnessed a substantial elevation, ascending from Ksh.18,000 to Ksh.29,000. Consequently, employees falling within this bracket can anticipate contributing Ksh.1,740, as opposed to the current Ksh.1,080. It is noteworthy that each employee contribution will be matched by their respective employers, maintaining the established practice.
These revised rates are slated to remain in effect until the subsequent review in January 2025. The adjustment, which commenced last year, follows a protracted legal battle that spanned nearly a decade. The NSSF Act of 2013 initially mandated a six percent deduction from workers’ salaries each month, with the implementation delayed due to legal challenges.
The breakthrough came in September 2022, when the Court of Appeal sanctioned the new deductions. Subsequently, the NSSF commenced the phased implementation of the new deduction scheme in the previous year. The initial step involved setting the Lower Earnings Limit at Ksh.6,000 and the Upper Earnings Limit at Ksh.18,000, as communicated through a public notice in January last year.
Looking ahead, a table from the NSSF Act 2013 outlines the progression of deductions, hinting at a potential increase in the lower earnings limit to Ksh.8,000 by 2025. The upper earnings limit is expected to rise to twice the national average earnings, aligning with the objective of bolstering savings for Kenyan workers.
However, questions have emerged regarding the influence of the current minimum wage on these calculations. The initial lower earnings limit of Ksh.6,000, established in the preceding year, was based on the minimum wage from 2013. As the minimum wage has increased since then, there is anticipation about whether this factor will be considered in determining future NSSF rates, a decision that will be shaped collaboratively by NSSF and the Ministry of Labour.
While the impending NSSF deductions signify a significant step towards fortifying social security provisions for Kenyan workers, ongoing considerations about the impact of the evolving minimum wage underscore the dynamic nature of economic policies and their implications on the workforce.