A new wave of financial strain looms for both employees and employers in Kenya, driven by a substantial increase in National Social Security Fund (NSSF) contributions effective 1st February, 2025. 

This adjustment marks a pivotal moment in the evolution of the statutory deductions, ushering in changes for all workers and employers in the country.

Under the revised framework, NSSF contributions will rise to 6 percent of an employee’s salary, matched equally by their employers. 

The new adjustment will see the maximum monthly contribution increase to KES4,320—doubling from the current KES2,160. Workers who are currently earning KES72,000 and above will bear the brunt of these changes, while those earning lower salaries will see their minimum contributions increase from KES420 to KES480.

In tandem with this change, the lower earnings limit for contributions will increase from KES7,000 to KES 8,000, and the upper earnings limit will jump from KES36,000 to KES72,000. 

These adjustments set the stage for further increases slated for February 2026, where the upper earnings limit will reach three times the national average earnings, projected to be KES108,000.

Historical context

The NSSF Act of 2013 established a framework that sought to boost retirement savings by replacing the nominal contribution of KES200 with a progressive system pegged on workers' salaries.

While the upcoming changes underscore the government’s commitment to bolstering the pension system, the policy has faced resistance, with employers citing its financial burden and employees lamenting the diminished take-home pay.

Given the country’s fragile economic recovery post-pandemic, political undercurrents and persistent inflationary pressures, the increase in statutory decuctions is likely to trigger cries from employers and workers alike.

For employers, the doubling of contributions translates to heightened labour costs, potentially leading to job cuts, hiring freezes, or salary stagnation as companies adjust their budgets. 

Employees, on the other hand, are likely to feel the pinch of reduced disposable income, compounding existing struggles with the high cost of living.

The ripple effects are expected to cascade into key sectors such as manufacturing, retail, and services, where the reliance on labour-intensive operations makes the increased deductions particularly impactful. 

Small and medium-sized enterprises (SMEs), which are already grappling with high operational costs, may face the greatest challenges in maintaining their workforce.

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