The government has increased National Social Security Fund (NSSF) deductions in accordance with the NSSF Act of 2013.
The NSSF board directed employers to implement the schedule of NSSF Act 2013 that provides for an increase in the second year, effective February 2024.
What are the new NSSF rates?
Kenyans will now part away with between Ksh 420 and Ksh 1,740 beginning February this year. When matched with the employers’ contribution, the minimum contribution raises to KSh 840 while the maximum contribution increase to KSh 3,480.
In 2023, the lower limit for contributions was Ksh 6,000, while 2024’s has been set at Ksh 7,000. Kenyans in this category will now contribute Ksh.420 up from Ksh.360.
As for the upper earnings limit, employees will contribute Ksh.1,740 up from Ksh.1,080.
The employer is required to remit the same amount as the employee, which has been the norm.
The NSSF Act of 2013 provides for incremental yearly contributions under the Third Schedule of the Act, instead of one huge increment.
The set deductions will be effected until January 2025, when NSSF reviews them. The new deduction system, which began last year, will gradually increase rates over a five-year period.
The 2013 NSSF Act
The NSSF Act of 2013 has faced legal hurdles over the years and was only effected in February 2022.
The National Social Security Fund (NSSF) Act No. 45 OF 2013 was officially enacted on December 24, 2013. It was scheduled to come into effect on January 10, 2014.
However, its implementation was stopped in 2014 following a court order. On September 19, 2022, the Employment and Labor Relations Court (ELRC) declared the act unconstitutional.
The ruling was late reversed on February 3, 2023, by the Court of Appeal, which overruled the ELRC judgment.
Following the ruling of the court of appeal, the act was put into effect and from February 2023, the NSSF began enforcing the contribution requirements as stipulated in the act.
The Act requires that six percent of workers’ salaries be deducted monthly as NSSF contribution.
The five-year NSSF plan targets to enhance savings for retirement among Kenyans.
William Ruto eyes more revenue collection and savings
The William Ruto government has been keen on enhancing the financial well-being of the country.
This has seen the president widen the tax base to help the state collect more revenue to support the running of his administration. Additionally, more government services have been on-boarded onto the e-Citizen platform to prevent the leaking of funds.
The Hustler Fund initiative also presents a saving aspect, where five percent of the money a person borrows goes into savings.
A person can also choose to save more if they want to in addition to the mandatory savings applied on the loans.
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