FKE urges employers to implement enhanced NSSF deductions

                                      FKE Chief Executive Jacqueline Mugo

The Federation of Kenya Employers (FKE) has called on all employers to comply with the law and implement the enhanced National Social Security Fund (NSSF) deductions starting in February.

In a statement, FKE Chief Executive Officer Jacqueline Mugo urged employers to update their February payrolls to reflect the new deductions.

“These changes will take effect immediately, starting with the NSSF computations for February 2025 and subsequent periods,” Mugo said on Friday.

The federation reassured employers that the third phase of implementing the NSSF Act 2013, which takes effect in February, is legally binding.

“Employers are urged to adhere to these statutory requirements to avoid penalties for non-compliance,” FKE stated.

“Accordingly, FKE advises all employers to update their payroll systems and implement the revised NSSF deductions in compliance with the Third Schedule of the NSSF Act No. 45 of 2013.”

In the breakdown of NSSF implementation phases, the first one which came into effect in 2023, has the Lower Earnings Limit set at Sh6,000, and the Upper Earnings Limit at Sh18,000.

In the second phase which came into effect in 2024, the Lower Earnings Limit increased to Sh7,000, while the Upper Earnings Limit rose to Sh36,000.

In the third phase which takes effect in February 2025, the Lower Earnings Limit is now set at Sh8,000, and the Upper Earnings Limit at Sh72,000.

Mugo recently acknowledged that while FKE supports increased NSSF contributions, employees’ payslips have been stretched due to the rising number of deductions.

“We support the NSSF increase because many Kenyans retire without adequate savings, as their pensions were previously too low. However, we are raising concerns about the overall burden of payroll deductions—it has become too high,” she said recently.

She emphasized that employees need decent pensions upon retirement, noting that Kenya has yet to meet global benchmarks.

The Central Organisation of Trade Unions (COTU) Secretary General, Francis Atwoli, has also defended the increased NSSF deductions, arguing that they will ensure Kenyans live comfortably in retirement.

“The International Labour Organisation (ILO) recommends that retirees should receive at least 40 to 60 per cent of their pre-retirement income. This underscores the importance of strengthening NSSF as a mandatory savings scheme,” Atwoli said.