Case Filed Seeking Ban On Increased Ruto NSSF Deductions

President William Ruto's government's ambitious move to raise contributions made towards the National Social Security Fund (NSSF) has hit a hurdle after Nairobi-based lawyer, John Maina Ndegwa, moved to the Milimani Law Courts to stop the increased deductions expected to take effect on February 9, 2024.

Ndegwa filed a petition at the High Court challenging the new NSSF deductions, arguing that the economic outcome of the said implementation risks further crippling the economy of Kenya.

He argued that more employers will be forced to fire their employees due to the increased running costs of maintaining them at the workplace.

“The said proposed deduction from the employees are coming at a time when Kenyans are inebriated with the high cost of living with a shrinking pay slip because of a depressed economy,” reads the petition.

The lawyer wants the court to certify the matter as urgent and issue a temporary order stopping the board of NSSF from implementing the contribution rates for 2024.

“The 3rd schedule of the NSSF Act 2013 spells clearly the amount chargeable within the first four years after the commencement of the Act on 10th January 2014 yet the Board has failed to offer guidance to the employers on how to implement this causing confusion and anxiety in both public and private sectors of the economy of Kenya,” reads court papers.

Ndegwa listed top officials in President Ruto’s government as respondents including; Labour Cabinet Secretary Florence Bore and Social Protection Principal Secretary Joseph Mogosi Motari.

Others listed as respondents include; the NSSF Board and Attorney General Justin Muturi. 

Should the High Court turn down Ndegwa's petition, then Kenyans risk paying between Ksh420 and Ksh1,740 in the new deductions, a year after they were enforced.

February 9, 2024, will mark a year since NSSF's announcement on the new monthly deductions and effectively marks the beginning of year 2 under the new deductions regime.

A key thing to note is that the 3rd schedule of the NSSF Act 2023 provides for revised deductions each year, starting year 2 which is February 9, 2024.

This means in the case of the lower earnings limit in Tier 1, the current deductions of Ksh360 by employees and matched by employers which were arrived at from 6 per cent of 6,000 will increase to Ksh420, from Ksh7,000 in year 2.

Subsequently, the Upper Earnings Limit has now been hiked to Ksh29,000 from the current Ksh18,000, meaning that most workers will contribute Ksh1,740 up from Ksh1,080. Each contribution will be matched by the employer, as has been the case.

The rates will remain in place until the next review in January 2025. The new deduction plan, which began last year, will gradually increase rates over five years from an initial flat rate of Ksh200 to an enhanced plan that sees Kenyans lose six per cent of their salaries to the new NSSF scheme.

President Ruto's administration has been eyeing to create a culture of savings to create long-term investment and subsequently boost the country's growth.

Through NSSF contributions, the government is eyeing to raise over Ksh1 trillion from the NSSF by 2027.