Could NSSF Deduct More From Kenyans' Salaries From February 2024?
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.
Marvin Chege 
On February 9, 2023, the National Social Security Fund (NSSF) announced new monthly deductions which saw both Kenyan employers and employees jointly contribute Ksh2,160, which is Ksh1,080 for each category.
This is after the Court of Appeal allowed the government to implement a new law that saw monthly contributions to the social fund increased by ten times, that is from Ksh200 to the current amount of Ksh2,160.
Appeal Court judges Hannah Okwengu, Mohamed Warsame and John Mativo ruled that the National Social Security Fund (NSSF) Act of 2023, which sought to increase the monthly contributions, was legal.
“We find that the Employment and Labour Relations Court (ELRC) made a mistake in declaring the Act unconstitutional when it had no jurisdiction to question the validity of the law as that was a preserve of the High Court,” ruled the judges on February 3, 2023.
An image of a bundle of notes. /FILE
The ruling by the Appellate Court also dismissed a High Court ruling that barred NSSF from making mandatory deductions from workers' salaries, deeming the move unconstitutional.
On September 22, 2022, the ELRC court argued that it was in violation of labour rights and insisted that workers should have a right to choose a pension scheme without worrying about contributions to NSSF.
By upholding the NSSF Act of 2023, the Court of Appeal also allowed the birth of the controversial Section 20 of the Act which had stalled in the courts for more than 10 years over the quest to enhance payslip deductions to six per cent of one's earnings, each being matched by the employer.
NSSF's statement on February 9 last year asked employers to comply with the Appellate Court's pronouncement on the matter, dividing the contributions into two tiers; Tier 1 seeing both the employees and the employers currently paying Ksh360 while Tier 2 (pension fund) seeing both the employee and employer pay Ksh720.
On May 1, 2023, President William Ruto announced that following the changes in NSSF deductions, the monthly collection grew from Ksh1.2 billion to Ksh2.5 billion in February and Ksh3.5 billion in March, adding that the target was Ksh6.5 billion per month, "money that will be available to the Kenyan workers in retirement".
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 percent of 6,000 will increase to Ksh420, from Ksh7,000 in year 2.
The upper earnings limit will be changing from 50 percent of national average earnings to 1x, meaning for Ksh18,000, this would be revised to Ksh36,000, a matter that could have a huge impact on deductions.
Some reports claimed that the revised deductions would take effect in January 2024, reports the NSSF has since termed misleading.
"If you earn more than Ksh36,000 per month. Gross, your NSSF deduction is about to go up from Ksh1,080 per month to Ksh2,160 in Year 2 which begins this month. The deductions will increase each year till year 5," the flagged-down reports indicated.
NSSF, though yet to directly comment on the incoming revised deductions from February 2024, noted that it would provide official communication regarding the reductions and that employers and members shall be guided accordingly when the progression period falls due.
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.
Currently, NSSF collects approximately Ksh4 billion monthly from the registered members. This translates to an annual collection of Ksh48 billion.
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