City Lawyer Files Case Against Government’s NSSF Deduction Increase Proposal

Lawyer John Maina Ndegwa has initiated legal proceedings at the Milimani Law Courts to contest the upcoming implementation of heightened National Social Security Fund (NSSF) deductions scheduled for next month.

Ndegwa argues that the economic repercussions of this change will adversely affect Kenya’s economy, potentially leading to increased redundancies as employers grapple with heightened operational costs in maintaining their workforce.

The petition highlights that the proposed employee deductions coincide with a time when Kenyans are grappling with a high cost of living, resulting in shrinking pay slips due to the overall economic downturn. Ndegwa is seeking an urgent court certification of the matter and requests a temporary order restraining the NSSF board from implementing the contribution rates set for 2024.

Court documents also point out that the NSSF Act of 2013, specifically its 3rd schedule, clearly outlines the chargeable amounts in the initial four years after the act’s commencement on January 10, 2014. Ndegwa argues that the NSSF Board’s failure to provide guidance to employers on implementation has led to confusion and anxiety across both public and private sectors in Kenya.

The revised rates stipulate an increase in the lower earnings limit, or the minimum pensionable salary, from Ksh.6,000 to Ksh.7,000. Employees falling into this category will contribute Ksh.420, up from the current Ksh.360.

Similarly, the Upper Earnings Limit has been raised to Ksh.29,000 from Ksh.18,000, resulting in higher worker contributions of Ksh.1,740, up from Ksh.1,080. Employers will continue to match each contribution, maintaining the existing practice.

These rates are set to remain until the next review in January 2025, as part of a phased plan to gradually increase deductions over five years, initiated last year.