Teachers will experience an increase in their National Social Security Fund (NSSF) contribution starting this month of February.
Currently teachers like other employees contribute sh. 360 each month towards NSSF and the employer is also required to remit the same amount to the kitty.
The law has set a fixed base of sh 6,000 for all public servants which include TSC teachers. NSSF takes 6% of this base i.e 6% of sh 6,000 = sh 360.
The employer TSC also remit same sh 360. So in total a teacher gets sh 720 in NSSF contribution each month.
However new NSSF rates are expected, raising the base from sh 6,000 to sh 9,000 or higher.
If the base becomes sh 9,000: 6% of sh 9,000 = sh 540. This means teachers may start paying around sh 540 each month, while TSC contributes the same.
The deduction will be the same for all teachers, largely because it depends on the legal base, and not individual salaries.
The new deduction will affect not only teachers but millions of employees once this fourth and final phase of pension contribution takes effect.
However employers have warned against this move saying it will squeeze workers who are already grappling with a high cost of living.
The Federation of Kenya Employers (FKE) said the mandatory hike, while supporting long-term savings, presents a ‘significant issue’ for disposable income, amid concerns of a mounting burden from multiple statutory deductions.
“FKE supports the enhance contribution rates as they were embedded in the contribution plan and projections at the time the new NSSF rates were introduced. Pension savings are critical in promoting a saving culture and securing employees post retirement income,” said FKE Executive Director and CEO Jackqueline Mugo in a statement.
“The impact of the higher contri-bution bands will largely be felt by employees earning above Sh108,000 per month, as provided for under the NSSF Act. These contributions are statutory, and FKE continues to advise its members on compliance.”
“However, FKE underscores the key concern around the cumulative effect of payroll deductions and the resulting impact on employees’ take-home pay. This is a significant issue that must be addressed at enterprise level to ensure compliance while safeguarding employees’ ability to meet their basic and survival needs.”
She added: “FKE remains commit-ted to constructive engagement with government and social partners to achieve social protection objectives without undermining business sus-tainability and job creation.”
The increase that came into effect on effective February 1, raises the maximum monthly employee deduction to Sh6,480 from Sh4,320.
Employers must match this, bringing the total potential contribution per worker to Sh12,960.
The change centres on two adjusted salary limits, widening the portion of income subject to the pension levy.
The upper earning limit jumps to sh 108,000 per month from sh 72,000.
The lower earning limit jumps to sh 9,000 from 8,000. The system uses two tiers.
On the first sh 9,000 employee and employer each pay 6% i.e sh 540 each month marking the first tier.
On earnings between sh 9,001 and sh 108,000 the same 12% total rate applies.
This expanded bracket means notably higher deductions for mid and high earners.
The NSSF deductions adds more pressure to teachers payslips which are already riddled with other deductions.
Currently teachers are facing 1.5% housing levy, 2.75 Social Health Insurance Fund (SHIF), 7.5% provident fund and Knut, Kuppet and Agency fee deductions besides loan obligations which leave them with shrinked net salaries.
