Gvt raises NSSF deduction to 6% starting February 2025

Teachers and other employed Kenyans will take home less pay as the government plans to raise the National Social Security Fund (NSSF) deductions by six per cent from next year.

In the new statutory deduction that is set to take effect beginning February, employees will pay up to Ksh4320 monthly from Ksh2160 currently contributed by both employees and employers.

The new regulation is part of the NSSF Act of 2013 which is currently being implemented in phases. Employed Kenyans would be deducted 6 per cent of their salaries.

The deduction will be implemented beginning February 1, 2025, as part of the government’s move to enhance remittance to the security fund.

According to the Act, the lower earnings limit or the amount that is considered the lowest pensionable salary has been raised to Sh9,000 up from the current Sh7,000 while the upper earnings limit has been raised to Ksh29,000 with this category of employees set to contribute more money. 

For instance, an employee earning an average wage of Ksh40,000 would take home only Ksh32,000 after all the statutory deductions such as the Housing Levy, the Social Health Authority, NSSF and Pay As You Earn (PAYE).

An employee earning Ksh50,000 will earn a net salary of Ksh38,000 after all the statutory deductions, similarly an employee earning 70,000 would earn Ksh53,000 after the deductions.

While remitting the funds, the employer would be required to match the salaries of the employee with the deduction, simply, it means the deductions would be based on the amount an individual earns. 

Despite becoming law in 2013, the Act was implemented in 2023 after a decade-long court battle that sought to scrap the Act. However, in 2022, the Court of Appeal granted the government leeway to implement the Act.

The latest development comes amidst the government’s plan to implement several tax measures in the three tax bills that are currently undergoing public participation.

The National Treasury came up with the Tax Procedures (Amendment) Bill, the Tax Laws (Amendment) Bill, and the Business Laws (Amendment) Bill as it sought to bridge the budget deficit following the withdrawal of the defunct Finance Bill 2024.

The National Assembly Committee on Finance and National Planning, led by Molo MP Kuria Kimani, on Thursday, concluded public hearings of the bills, paving the way for further approval by parliament.