The Federation of Kenya Employers (FKE) has called on all employers to comply with the enhanced National Social Security Fund (NSSF) deductions, set to take effect in February 2025.
In a statement, FKE Chief Executive Officer Jacqueline Mugo emphasized the need for employers to update their payroll systems to reflect the new deductions. She reiterated that the third phase of the NSSF Act 2013 is legally binding, and failure to comply could result in penalties.
“These changes will take effect immediately, starting with the NSSF computations for February 2025 and subsequent periods,” Mugo said on Friday.
The revised deductions are part of a phased implementation plan. The first phase, introduced in 2023, set the Lower Earnings Limit at Ksh6,000 and the Upper Earnings Limit at Ksh18,000. In 2024, the second phase raised these limits to Ksh7,000 and Ksh36,000, respectively. The final phase, taking effect in February 2025, will see the Lower Earnings Limit rise to Ksh8,000 and the Upper Earnings Limit increase significantly to Ksh72,000.
FKE has voiced its support for higher NSSF contributions, citing the need for better retirement savings for Kenyan workers. However, Mugo also raised concerns about the growing burden of payroll deductions on employees.
“We support the NSSF increase because many Kenyans retire without adequate savings, as their pensions were previously too low. However, we are raising concerns about the overall burden of payroll deductions—it has become too high,” Mugo stated.
Despite these concerns, the push for enhanced NSSF contributions has received backing from the Central Organisation of Trade Unions (COTU). Secretary-General Francis Atwoli has defended the deductions, arguing that they are necessary for ensuring financial security in retirement.
“The International Labour Organisation (ILO) recommends that retirees should receive at least 40 to 60 per cent of their pre-retirement income. This underscores the importance of strengthening NSSF as a mandatory savings scheme,” Atwoli said.
As the February deadline approaches, employers are urged to make the necessary adjustments to their payroll systems to comply with the law. Failure to do so could lead to penalties, reinforcing the importance of timely implementation.
While the increased deductions are expected to benefit retirees in the long run, the debate over the affordability of multiple statutory deductions remains ongoing. The government, employers, and workers’ unions will need to strike a balance between securing workers’ futures and maintaining reasonable take-home pay in the present.
