Further squeeze on payslips as NSSF deductions go up
Millions of workers in Kenya are poised to experience a further reduction in their take-home pay as the government plans to implement additional cuts in new, higher NSSF deductions starting February.
In a notice addressed to employees and employers nationwide, the National Social Security Insurance Fund (NSSF) has informed the public about the new, higher statutory savings bands that must be adhered to by the 9th of each subsequent month.
Following the third schedule of the NSSF Act 2013, the NSSF has established the total contribution by both the employee and employer at Kes420 per month, amounting to Kes840 for the tier one group of workers.
For the tier two group of workers, or those earning higher incomes, the law mandates a monthly savings of Kes1,740, with the employer remitting an equal amount, resulting in a total of Kes3,480 per month.
President William Ruto‘s administration initiated the rollout of the NSSF Act last year, elevating the mandatory monthly contributions to the NSSF from Kes200 to a graduated scheme.
This scheme will eventually require workers to allocate 6 percent of their salaries to the national savings plan. The incremental changes are scheduled to be fully implemented within five years.
“The lower earnings limit and upper earnings limit shall, for the first four years after the commencement date, be in accordance with the table contained in this schedule,” the NSSF Act 2013 reads.
“After the fourth year and thereafter, the lower earnings limit shall be, for each financial year, the amount gazetted by the Cabinet Secretary from time to time as the average statutory minimum monthly basic wage for the top urban centres, second tier urban centres and rural areas for the year and the upper earnings limit shall, for each financial year, for each financial year, be the level of earnings equal to four times the national average earnings.”
Read also: State gets nod to keep collecting housing levy
Throughout Kenya, the burden of taxes and statutory deductions persists amidst stagnant wages and a lack of new job opportunities, dominating everyday conversations.
Faced with the increasing cost of living, a significant number of Kenyans assert that these government collections primarily contribute to funding government extravagance rather than improving public services.
In December, the Federation of Kenya Employers reported the loss of approximately 70,000 private-sector jobs due to a drastic rise in operating costs and the closure of some businesses.
The employers’ lobby warned that the Kenyan economy is at risk of losing more jobs, emphasizing that four out of every ten employers are still contemplating scaling down their operations in 2024.
