Govt increases NSSF deductions
Govt increases NSSF deductions
Kenyans would need to take out more money each month to cover the increased National Social Security Fund (NSSF) withdrawals.
Kenyans will be required to pay between Ksh420 and Ksh1,740 for the new fees, which are scheduled to go into effect during the February 2024 payroll, according to a letter sent by the NSSF to businesses on Friday.
This is in line with the 3rd Schedule of the NSSF Act Cap45 of 2013, which gradually raises the mandatory pension contributions by employees based on the earning limits. This is equally matched by the employer.
According to the Act, the deductions will be raised to specific amounts over the first five years. The first year saw mandatory contributions increase from a flat rate of Ksh200 per employee to a graduated plan that will six per cent of an employee’s salary.
NEW RATES
The deductions are based on two categories; the lower limit (Tier 1) and the upper limit (Tier 2). The upper earning limit is for employees who are earning above Ksh18,000 and above while the lower earning limit (considered the lowest pensionable salary) is for employees who earn below Ksh18,000.
According to the new rates, Tier 1 deductions will be based on the revised lower limit of Ksh7,000, up from the current Ksh6,000. This means that the deductions will go to Ksh420 from Ksh360.
Tier 2 deductions, on the other hand, have been raised to Ksh29,000 from the current Ksh18,000. This implies that workers will be required to pay Ksh1,740, up from Ksh1,080.
In both instances, the employers will be required to equally match the contributions.
The new rates will take effect until January 2025, when the mandatory deductions will undergo another review.
“Remittances to the Fund should be made by the 9th day of each subsequent month. Employers should not hesitate to reach out to the Fund for any clarification. Our team is dedicated to supporting employers to attain compliance with the NSSF Act,” the notice read in part.
“The Fund wishes to thank all those Employers who have continued to remit the contributions of their workers since operationalization of the NSSF Act, 2013.”
The NSSF Act was initially set to take effect in 2014, but the process stalled owing to numerous cases that challenged the new mandatory contributions.
In September 2022, the Court of Appeal gave NSSF a new lease of life when they gave the green light for the new deductions to take effect.
