New NSSF Contributions Breakdown by Salary
The approval of the full implementation of the National Social Security Fund (NSSF) Act No. 45 of 2013 by the Court of Appeal has elicited mixed reactions from the Kenyan population.
The approval means that Kenyans will have to pay more money towards their social security funds each month.
This move is part of President William Ruto’s social security plan to establish a larger funds pool, where workers will receive monthly stipends instead of a one-time payment.
Under Ruto’s plan, the minimum monthly deductions, which were last reviewed in 2001, will increase tenfold from Ksh200 to Ksh2,000.
This increase has led to concerns among Kenyans who will receive lower salaries after the deduction is implemented.
The NSSF Board of Trustees Chairman, Antony Munyiri, has released a statement to assuage the public’s fears by reiterating that the Fund remains focused on providing the highest standard of service and protection for its members’ contributions.
He believes that this decision will bring the NSSF closer to achieving its goal.
According to the NSSF Act, there are two earning limits for employees, the Upper Earning Limit (UEL) for employees who earn Ksh18,000 and above, and the Lower Earning Limit (LEL) for those who earn below Ksh6,000.
The pension contribution is calculated as 12% of the pensionable wages, which is a sum of equal portions from both the employee and the employer.
The employee’s contribution is deducted directly from their salary, while the employer’s contribution comes directly from the employer.
For employees earning between Ksh3,000 and Ksh6,000, they will only contribute to the Tier 1 category.
Those in the UEL category will contribute to both the Tier 1 and 2 categories, while Tier 2 is calculated as the contribution balance for earnings between Ksh6,000 and Ksh18,000. Employees earning above Ksh10,000 will contribute to both Tier 1 and Tier 2 categories.
The computation of the contribution amount is based on the employee’s salary scale. For employees earning between Ksh3,000 and Ksh4,499, the monthly deduction is Ksh360.
Those earning between Ksh4,500 and Ksh5,999 will contribute Ksh540, while employees earning between Ksh6,000 and below Ksh10,000 will pay Ksh720.
For employees earning above Ksh10,000 and below Ksh14,000, the monthly contribution is Ksh1,200, while those earning between Ksh14,000 and Ksh17,999 will pay Ksh1,680. Finally, employees earning above Ksh18,000 will pay a monthly contribution of Ksh2,160.
In conclusion, the implementation of the NSSF Act No. 45 of 2013 by the Court of Appeal has caused mixed reactions among Kenyans due to the increase in the minimum monthly deductions.
However, the NSSF Board of Trustees Chairman, Antony Munyiri, has reassured the public that the Fund remains focused on providing the highest standard of service and protection for its members’ contributions.
The computation of the contribution amount is based on the employee’s salary scale and is calculated as a result of equal portions from both the employee and employer.
New NSSF Contributions Breakdown by Salary
