Payslips of salaried Kenyans are set to get thinner as new rates for contributions to social security come into force next month.
National Social Security Fund (NSSF) deductions are set to double from February 1 as the fund adjusts employer and employee contributions.
Under the new framework, NSSF contributions have increased to six per cent of an employee’s salary, matched in equal amounts by employers.
The minimum contributions are set to increase from Sh420 to Sh480 while high-income earners will pay as high as Sh4,320 from the current Sh2,160.
The upper income limit is set to go up from Sh36,000 to Sh72,000 while the lower limit would be adjusted from Sh7,000 to Sh8,000.
Employees earning Sh72,000 and above would bear the biggest brunt of the adjustments as their contributions would be increased to Sh4,320 from the current Sh2,160.
According to the rates set in the NSSF Act, 2013, Kenyans earning Sh50,000 monthly will pay Sh480 for the first tier and Sh2,520 for the second tier.
This would push their total deductions to Sh3,000 from the current Sh2,160. The contributions would add to Sh12,000 in the 2026 spending period.
NSSF was created in 1965 under a law that obligated employees to contribute Sh200 with a similar amount to be contributed by the employer.
On assuming office, President Uhuru Kenyatta’s administration instigated changes to the law, increasing NSSF contributions to six per cent of earnings.
This was aimed to boost retirement savings by replacing the absolute figure of Sh200 with a progressive system based on what employees earn.
The new law was to be implemented in January 2014 but was challenged in court until February 2023 when a ruling was given.
Last February, NSSF implemented the second phase of the rollout and is now gearing for the third phase. It is the third phase that is set to take a further hit at salaried Kenyans’ payslips in the face of the other levies President William Ruto’s administration introduced.
Salaried Kenyans already pay 2.75 per cent of their wages for contributions to the Social Health Insurance Fund – formerly NHIF.
A housing levy of 1.5 per cent was also implemented last year while pay-as-you-earn (income tax) is up to about 35 per cent.
A number of employees have also subscribed to various welfare groupings and staff unions. With the deductions, financial analysts point out that those earning Sh50,000 would take home an average Sh39,000 while those earning Sh100,000 would take home Sh72,000.
President Ruto defended the deductions towards NSSF contributions saying the government aimed to raise Sh1 trillion by 2027.
The President, back in December 2023, said the “new framework would be fair, equitable and progressive”.
But two years into the rollout, the
new rates have triggered a hue and
cry from employers and workers
alike, with employers citing the
ensuing financial burden.
