Confusion is growing among Kenyan employers regarding expected changes in the pension contributions as the first year of implementation of the NSSF Act, 2013, lapses in February with no clarity of what the next level of deductions will be.
The government started implementing the Act in February last year, raising mandatory contributions from a flat Sh200 per employee (with an equivalent contribution from the employer) to a graduated plan that will eventually hit six percent of employees’ salaries.
Implementation of the law requires that the deductions will be raised to specific amounts/percentages over the first five years.
NSSF last year set the lower and upper earnings limit at a monthly salary of Sh6,000 and Sh18,000 respectively, which effectively saw employees earning Sh6,000 contribute Sh360 while those pocketing Sh18,000 and above take a Sh1,080 shave.
Issuing guidelines on payment of contributions under the new law in February last year, then NSSF chief executive officer David Mwangangi, in a communication to employers said: “After the first year, the lower earnings limit shall be the amount gazetted by the Cabinet Secretary Ministry of Labour, Social Security and Services annually as the average statutory minimum monthly basic wage for the year.”
This would differ from the law which directs that the lower earnings limit for the second year (this calendar year), shall be Sh7,000, which would raise the minimum contribution to Sh420.
Business Daily's attempted to reach out to NSSF CEO David Koross yesterday for a clarification on how contributions will look like effective February, but he did not respond to text messages sent to his known phone number. Calls to the same number could also not go through.
Similar attempts to Federation of Kenya Employers Executive Director, Jacqueline Mugo, to find out whether employers were in engagements with the government over the upcoming transition and their preparations, were futile as she did not respond to text messages, nor did she pick calls.
President William Ruto has been keen to grow NSSF contributions and last month indicated that the goal was to grow them to Sh1 trillion by 2027.
“The fund will raise an additional Sh400 billion in the next five years,” he said during Jamhuri Day celebrations.
