The National Social Security Fund (NSSF) has directed all employers to comply with the recent court ruling that allowed the increase in monthly deductions as stipulated in the NSSF Act 2013.
According to the NSSF Chairperson Antony Munyiri, employers who have been following the NSSF Act No. 45 of 2013 should continue doing the same while those who have not been complying should consider doing the same.
The new monthly contribution rates mean that both the employee and employer will contribute a total of Kes. 2,160. This is an increase from the previous amount of Kes. 200.
The recent ruling came after a prolonged legal battle in court since 2014.
Kenya Tea Growers Association and 14 other parties protested against the new claiming that the public participation process was not carried out effectively. Besides, also said that the senate was not involved in the legislative process.
The appellate court’s ruling was that the Employment and Labour Relations Court did not have jurisdiction to hear the matter. There the NSSF Act of 2013 was declared legal and constitutional.
The new monthly deductions represent a huge increase and will be quite an uphill task for some employees who were used to contributing Kes. 200 on a monthly basis.
Employees who earn less than Kes. 15,000 monthly will now be required to contribute Kes. 350 per month. On the other hand, those earning 15,000 will be deducted Kes. 800 per month.
Those earning a monthly income of Kes. 18,000 and above will be deducted, Kes. 1,080 with their employers having to match the amount in contributions.
Those who earn at least Kes. 50,000 per month will be required to contribute Kes. 3,000 which represents a 6% deduction from their monthly income. When the employer’s contribution is included, the total contributions rise to 12%.
On his part, the NSSF Chairperson saw the new deductions as an important step for Kenyan workers as this allows them to enhance their savings and secure their financial future ensuring that they can retire with something with their contributions.
The decision of the Court of Appeal is also a boost to President William Ruto’s push for higher retirement savings with the goal being to increase the rate of savings from the current 12% to 25%.
The increase in retirement savings is then expected to create a pool of funds which the government could borrow to finance infrastructure development at affordable rates and hence reduce the country’s reliance on foreign debt.
According to the NSSF Board of Trustees Chairperson, employers are required to remit the new monthly contribution to the Fund by the 9th of every month.
The NSSF hopes that all employers will comply with the recent court ruling on monthly contributions facilitating the implementation of the NSSF Act 2013.