Breakdown of NSSF Deductions Based on Salary Range
Salaried workers will take home less pay in February following the implementation of the new rates by the National Social Security Fund (NSSF).
NSSF increased the mandatory pension deductions for the February 2024 payroll, meaning that Kenyans will have to pay between Ksh420 and Ksh1,740.
The new rates will have a significant impact on the take-home pay for workers who have to endure tougher times in the future due to the tough economy.
To put it into perspective, in the past year alone, the government has taken a huge chunk of the worker’s payslips, following the implementation of the Finance Act 2023, which introduced the mandatory Housing Levy, the introduction of new tax brackets for the Pay as You Earn (PAYE) among others.
An attempt to block the collection of the Housing Levy was thwarted in court as the Court of Appeal allowed the government to keep collecting the levy until January 26, 2024, when the final verdict will be issued.
This means that from July 1, 2023, the government has been collecting 1.5 percent of Kenyans’ gross pay deducted for the Affordable Housing program, with their employer matching the deduction.
With all these factors combined, Kenyans will see a significant dent in their February pay slip, as the government seeks to increase revenue collection to reach over a trillion in the subsequent financial years.
NSSF Rates
According to the NSSF Act, the new rates are based on a worker’s salary scale which is divided into two; Upper Earning Limit (UEL) for employees earning Ksh18,000 and above and Lower Earning Limit (LEL) for those earning below Ksh18,000.
Employees’ contributions in the lower limit (Tier 1 category) will be based on the revised lower limit of Ksh7,000, up from the current Ksh6,000.
This means that the employees will contribute Ksh420 as opposed to the previous Ksh360.
On the other hand, employees in the Upper limit will be based on the revised limit of Ksh36,000, whereby workers will pay Ksh1,740 up from Ksh1,080.
In both instances, the employers will match the contributions.
Effective February 9, 2024, the total contributions will increase from the current Ksh2,160 to Ksh4,320.
How the Payslips Will be Affected
Aside from the 1.5 percent Housing Levy, the government introduced the expanded PAYE which factors in two new tax brackets; 35 percent PAYE for employees earning above Ksh800,000 monthly and 32.5 percent for those earning between Ksh500,000 and Ksh800,000.
For instance, a worker earning Ksh600,000 gross pay will remit Ksh195,000 while another worker earning Ksh1 million will be taxed Ksh350,000.
However, for most Kenyans, the average workers earn an average of Ksh20,000 based on the Kenya National Bureau of Statistics (KNBS data. Hence, a worker with a Ksh20,000 pay slip will earn a net pay of Ksh17,750.
Breakdown of NSSF Deductions Based on Salary Range
