Posted On: 19-03-2025

Workers Facing Increased NSSF Deductions Amid Regulatory Delays

Kenyan employees are feeling the pinch of higher National Social Security Fund (NSSF) deductions as delays from the Retirement Benefits Authority (RBA) slow down approvals for private pension scheme offsets. The NSSF Act 2013 requires both employees and employers to contribute six percent of pensionable earnings, with the implementation of higher rates beginning in January 2023. This change has significantly increased monthly contributions from Ksh 200 to Ksh 4,320.

To cushion employees and employers from these higher contributions, companies with RBA-approved private pension schemes can offset a portion of the NSSF deductions. Under this arrangement, both parties contribute Ksh 480 directly to the NSSF, while the rest is allocated to private pension schemes, keeping overall pension contributions steady.

However, due to delays in RBA approvals, many employers and workers who have not received the necessary clearance are forced to contribute the full Ksh 4,320 to the NSSF. This has led to increased payroll deductions for employees and additional financial strain on businesses.

The RBA cites system challenges and administrative issues at the NSSF as the cause of the approval delays. The authority has acknowledged the backlog and is working to resolve it, with a goal of reducing approval turnaround times to 10 days by April.

Currently, only a small percentage of employers have successfully secured approvals to offset their NSSF contributions. Data shows that 3,084 employers—representing less than five percent of active NSSF contributors—have contracted out, covering a membership of 1,273,799.

As this issue persists, both employees and employers are encouraged to closely monitor the approval process and actively engage with the RBA to expedite the necessary clearances. Accelerating these approvals will help ease the financial burden associated with increased NSSF deductions and ensure a smoother transition for affected workers and businesses.

At Zurit Consulting your take on the NSSF contributions are important at the shaping of a better approach in your prosperity.