Fri. Dec 6th, 2024

Kenyans to Receive Reduced Salaries as Government Plans Higher NSSF Deductions

Kenyans to Receive Reduced Salaries as Government Plans Higher NSSF Deductions

Employed Kenyans to Face Reduced Paychecks as Government Plans Higher NSSF Deductions

Kenyans are set to take home less of their salaries starting February 2025, as the government prepares to implement the next phase of the National Social Security Fund (NSSF) Act of 2013.

The new deductions will see employees contribute up to Ksh4,320 monthly, doubling the current Ksh2,160 contribution shared equally between employees and employers.

The updated deductions, equating to 6% of an employee’s salary, are part of the government’s efforts to enhance remittances to the NSSF.

The regulation will apply a revised earnings limit, increasing the lower pensionable salary from Ksh7,000 to Ksh9,000 and the upper limit from Ksh18,000 to Ksh29,000.

For example, an employee earning Ksh40,000 will take home about Ksh32,000 after statutory deductions, including NSSF, PAYE, the Housing Levy, and the Social Health Authority contributions.

Similarly, those earning Ksh50,000 and Ksh70,000 will net approximately Ksh38,000 and Ksh53,000, respectively, after deductions.

Employers will be required to match employee contributions, aligning deductions with individual earnings.

Although the NSSF Act was enacted in 2013, its implementation faced a decade-long court challenge that delayed enforcement until 2023. The Court of Appeal ruled in 2022, allowing the government to proceed with the phased rollout.

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This development comes amid heightened tax reforms by the government, which has introduced three tax-related bills—the Tax Procedures (Amendment) Bill, the Tax Laws (Amendment) Bill, and the Business Laws (Amendment) Bill.

These bills aim to bridge the budget deficit following the withdrawal of the Finance Bill 2024 and are currently undergoing public scrutiny.

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The National Assembly’s Finance and National Planning Committee, chaired by Molo MP Kuria Kimani, recently concluded public hearings on these bills, setting the stage for parliamentary debate and approval.

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