Higher NSSF Deductions to Reduce Take-Home Pay for Kenyan Teachers.
Kenyan employees, including teachers, will see reduced take-home pay starting February 2025 as the government plans to increase National Social Security Fund (NSSF) deductions to six percent.
This move, aimed at boosting contributions to the security fund, will double the maximum monthly deduction from Ksh2160 to Ksh4320 for both employees and employers.
Phased Implementation of the NSSF Act 2013
The adjustment is part of the phased implementation of the NSSF Act of 2013, which has been delayed for a decade due to legal challenges.
The Act mandates a six percent deduction from employees’ salaries to the fund.
The Court of Appeal, in 2022, granted the government permission to enforce the Act, leading to its eventual rollout starting 2023. The updated regulations will take effect fully by February 1, 2025.
New Earnings Limits to Increase Deductions
The Act revises the pensionable salary limits, raising the lower earnings threshold from Ksh7,000 to Ksh9,000 and the upper limit to Ksh29,000.
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Employees in this category will contribute more to the fund. For example, an individual earning Ksh40,000 will now retain only Ksh32,000 after statutory deductions such as the Housing Levy, Social Health Authority, NSSF, and Pay-As-You-Earn (PAYE).
Similarly, a worker with a salary of Ksh50,000 will take home Ksh38,000, while one earning Ksh70,000 will net Ksh53,000.
Employers are obligated to match their employees’ NSSF contributions, with deductions calculated as a percentage of individual earnings. This provision ensures that contributions to the fund are proportional to income, enhancing the financial sustainability of the pension scheme.
Tax Bills Under Public Scrutiny
The increase in NSSF contributions coincides with the government’s broader tax reforms, including three tax bills currently undergoing public participation.
The National Treasury introduced the Tax Procedures (Amendment) Bill, the Tax Laws (Amendment) Bill, and the Business Laws (Amendment) Bill to address budgetary gaps following the withdrawal of the Finance Bill 2024.
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The National Assembly Committee on Finance and National Planning, chaired by Molo MP Kuria Kimani, recently completed public hearings, paving the way for parliamentary review.
Higher NSSF Deductions to Reduce Take-Home Pay for Kenyan Teachers.
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