Kenyans’ voluntary savings in the National Social Security Fund (NSSF) reduced considerably in 2024 as employees struggled with higher obligatory monthly contributions. Data by the Retirement Benefits Authority (RBA) shows that voluntary contributions dropped by 47 per cent, from KSh1.9 billion in 2023 to KSh1.01 billion in 2024.
Employees typically pay a percentage of their wages into occupation pension schemes, with an option to make further contributions over the specified amount. However, these additional voluntary contributions (AVCs) have shrunk as workers prioritize mandatory NSSF deductions, which have risen significantly in recent years.
“While normal contributions from both parties showed strong growth, additional voluntary contributions and medical fund contributions declined, suggesting a shift in focus towards mandatory contributions,” RBA said.
Rising Mandatory Deductions
The implementation of the National Social Security Fund Act 2013, cleared by the courts in 2023, triggered steep increases in mandatory contributions.
- In February 2023, monthly deductions jumped from a flat KSh200 per worker to KSh1,080.
- In February 2024, the rates doubled again to a ceiling of KSh2,160.
- In February 2025, deductions doubled once more to KSh4,320.
- In February 2026, contributions are expected to grow by another 50 per cent, hitting a maximum of KSh6,480 per month.
Currently, employees earning KSh30,000 contribute KSh1,800, and employees in the KSh50,000 category contribute KSh3,000, while employees in the KSh80,000 and above class pay the maximum KSh4,320.
Impact on Workers and Employers
Employers are required to match workers’ contributions. For the high earners, this means contributing KSh480 to the NSSF and leaving the remainder of KSh3,840 in occupational or umbrella pension schemes. Such an employer who would wish to contract out of the NSSF must seek advance approval from the Retirement Benefits Authority (RBA).
The steep rise in deductions has shifted workers’ focus toward mandatory contributions, leaving less room for voluntary savings. As a result, private pension schemes are seeing slower growth in voluntary top-ups.
NSSF Takes Bigger Share of Pension Savings
Despite a fall in voluntary savings, overall pension savings grew sharply in 2024, with the NSSF driving much of the growth.
Contributions to the statutory scheme more than doubled, climbing to KSh59.1 billion from KSh25.3 billion the previous year. This surge followed the second phase of higher mandatory deductions.
In total, industry-wide pension savings increased 29 per cent to KSh263.4 billion in 2024 from KSh204.9 billion in 2023. The NSSF’s share of the overall contributions increased to 22.4 per cent from 10.9 per cent, a measure of how the scheme is gaining more of the retirement savings at the expense of private pension plans.
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