Workers and their employers will from this month cough up at least Sh2,000 extra when the government starts deducting a ten-fold increase in the National Social Security Fund (NSSF) contributions.
In a ruling made by the Court of Appeal, members will now increase their contribution to six per cent of an employee’s earnings, with the employer matching each employee’s deductions.
Appeal Court judges Hannah Okwengu, Mohamed Warsame and John Mativo ruled that the NSSF Act of 2013, which sought to increase monthly contributions from Sh200 to Sh2,000, is legal.
The ruling comes after President William Ruto publicly declared that the amount should be increased, to enable Kenyan employees to save up a reasonable amount.
“Majority of people on the roll of NSSF are paying Sh200, it is ridiculous We just got a ruling from the court a week ago that it is wrong for us to increase it from Sh200, I don’t know really know what we are doing. Do we live in the same country?” President Ruto said.
In September 2022, the Labour and Employment Relations Court had declared the bid unconstitutional, null and void, saying the NSSF Act, 2013, was in breach of the Constitution as there was no public participation ahead of its enactment.
In November 2022, Federation of Kenya Employers added their voice saying, the proposed increase in the NSSF contributions should be spread over five-years.
However, President Ruto said that he had agreed with NSSF to talk to the court and reconsider the ruling.
“We cannot continue to borrow from the savings of others. We need to build our country with our savings. Let us borrow from our savings so that we can give interest to our lenders,” President Ruto said.
The said Public Notice has also provided computation guidelines to employers on how to calculate the contributions set at 12% of the pensionable wages made up of two equal portions of 6% from the employee and 6% from the employer subject to an upper limit of KES 2,160 for employees earning above KES 18,000.
The contributions were last reviewed in 2001 when the payment rate was increased to Sh200 from Sh160.
If implemented, the stalled NSSF Act 2013 will see workers compelled to save more for retirement while employers will face increased compliance costs.