Kenyans in formal employment will dig a little deeper into their pockets starting this month after NSSF rolled out new contribution rates.
In a notice issued on Thursday, February 12, the National Social Security Fund said the new rates have officially taken effect and employers must update their payrolls immediately. The changes follow the ongoing implementation of the NSSF Act, with Year 3 ending on January 31 and Year 4 now kicking in.
Under the new structure, the first Ksh9,000 of a worker’s salary will attract a 6 per cent contribution from both the employee and the employer. This means Ksh540 will be deducted from the employee and the employer will match it with Ksh540, making Ksh1,080 in total for Tier I.
For those earning above Ksh9,000, the rest of the salary up to Ksh108,000 will fall under Tier II.
At the top bracket, both the employer and the employee will now contribute Ksh5,940 each under Tier II. When combined with Tier I, the highest total monthly contribution per employee will now reach Ksh12,960.
Employers have also been directed to ensure that all deductions are remitted to NSSF by the 9th day of the following month, starting in March.
For many workers, the difference will show up clearly on their payslips.
Take an employee earning Ksh100,000 for example. They will part with Ksh540 under Tier I. The remaining Ksh91,000 will attract Tier II contributions amounting to Ksh5,460. In total, the employee will now contribute Ksh6,000 every month, up from Ksh4,320 in the previous phase. The employer will match the same amount.
Those earning lower salaries will also see an increase, though not as sharp as high earners.
Even as workers adjust to the higher deductions, NSSF announced that members’ savings earned a 17 per cent net interest for the 2024/2025 financial year. The announcement was made during the fund’s 8th Annual General Meeting held on February 6.
For employees already grappling with rising living costs, the new rates may feel heavy. But NSSF says the goal remains the same to help Kenyans build stronger retirement savings for the future.