Teachers, Civil Servants Face More Financial Strain as NSSF Contributions Rise

Teachers, Civil Servants Face More Financial Strain as NSSF Contributions Rise

Salaried workers in Kenya will experience a reduction in their take-home pay at the end of February 2025 due to the implementation of the third phase of the NSSF Act.

The government will increase deductions from the payslips of employees earning a monthly salary, regardless of their income level.

Employers are also required to match the contributions made by their employees, which will further raise the cost of doing business in the country.

Currently, the minimum pensionable income is set at Ksh7,000, while the maximum is capped at Ksh36,000.

As a result, the highest NSSF deduction is Ksh2,160 from the employee, with an equal amount deducted from the employer, bringing the total to Ksh4,320.

Starting in February 2025, the minimum pensionable income will rise from Ksh7,000 to Ksh8,000, and the maximum will increase to Ksh72,000.

Consequently, the deduction for NSSF Tier 1 will go up from Ksh420 to Ksh480, while the Tier II limit will increase from Ksh1,740 to Ksh3,840.

Overall, the limit on NSSF deductions will rise from Ksh2,160 to Ksh4,320, which will also be matched by employers.

For instance, a Kenyan earning Ksh50,000 will see their NSSF contribution increase from Ksh2,160 in January to Ksh3,000 in February, before other taxes like the housing levy are deducted.

Similarly, an employee earning Ksh80,000 will now contribute Ksh4,320, up from Ksh2,160.