Employees across the country are set to take home slightly less pay starting February following the implementation of new National Social Security Fund (NSSF) contribution rates.
The revised rates are part of ongoing pension reforms aimed at increasing long-term retirement savings for workers. While the changes are intended to strengthen social security, they will have an immediate effect on monthly net income for both salaried employees and their employers.
Under the new structure, contributions are calculated using a tiered system based on an employee’s salary. This means workers will contribute more than before, with deductions rising in line with earnings. Employers are also required to match employee contributions, increasing overall payroll costs.
For employees, the most noticeable impact will be higher monthly deductions, which directly reduce take-home pay. Workers who previously contributed a fixed amount will now see variable deductions depending on their income bracket, with higher earners experiencing a bigger reduction.
Employers, especially small and medium-sized businesses, may also feel the pressure as matching contributions increase operating costs. Some businesses have raised concerns that the higher payroll burden could affect hiring decisions or salary reviews.
Government officials, however, argue that the changes are necessary to ensure workers have adequate savings upon retirement. They say the revised rates align Kenya’s pension system with regional and global standards and reduce the risk of financial hardship in old age.
Labour experts advise employees to review their payslips carefully from February and plan their finances accordingly. While the short-term impact may feel uncomfortable, they note that the long-term benefit is improved retirement security.
The new NSSF rates come at a time when many households are already grappling with a high cost of living, making the reduction in disposable income a sensitive issue for workers nationwide.
