Kenya To Deduct More From Salaries As Gov’t Aims To Bridge Budget Deficit
Employed Kenyans will receive less salary as the government prepares to increase National Social Security Fund (NSSF) deductions starting next year.
Kenyans will pay up to Ksh4,320 monthly under the new statutory deduction, which will take effect in February next year, up from the current Ksh2,160 donated by both employees and employers.
The new regulation is part of the NSSF Act of 2013, which is being implemented in stages. Employees in Kenya would see a 6% deduction from their salary.
The deduction will be applied on February 1, 2025, as part of the government’s efforts to improve remittances to the security fund.
According to the Act, the lower earnings limit, or the amount regarded as the lowest pensionable wage, has been increased to Sh9,000 from Sh7,000, while the higher earnings limit has been raised to Ksh29,000, with this type of employee expected to contribute more money.
#DataPoint
— Citizen TV Kenya (@citizentvkenya) November 28, 2024
Workers’ NSSF contributions to go up in 2025
Government implements the NSSF Act of 2013#CitizenTonight @SamGituku pic.twitter.com/mMhH6Gx76Q
For example, an employee receiving an average pay of Ksh40,000 would only receive Ksh32,000 after all statutory deductions like the Housing Levy, the Social Health Authority, the NSSF, and Pay As You Earn (PAYE).
An employee earning Ksh50,000 will get a net pay of Ksh38,000 after the statutory deductions, whereas an employee earning Ksh70,000 will earn Ksh53,000 after the deductions.
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When remitting payments, the employer is expected to match the employee’s salary with the deduction; simply put, the deductions are based on how much an individual makes.
Despite being signed into law in 2013, the Act was not enacted until 2023, following a decade-long judicial struggle to overturn it. However, in 2022, the Court of Appeal gave the government leeway in implementing the Act.
The most recent development comes as the administration prepares to enact a number of tax reforms in three tax legislation that are presently being debated by the public.
To address the budget deficit, the National Treasury introduced the Tax Procedures (Amendment) Bill, the Tax Laws (Amendment) Bill, and the Business Laws (Amendment) Bill seeking to curb the budget deficit after Finance Bill, 2024 withdrawal.
Kenya To Deduct More From Salaries As Gov’t Aims To Bridge Budget Deficit
