NSSF doubles contributions to sh59.14 billion for year ending June 2024

The National Social Security Fund (NSSF) exists for the public good, It offers social protection to all Kenyan workers. They provide social security protection to workers in the formal and informal sectors after registration, members receive their contributions, manage funds of the scheme, process and ultimately pay out benefits to eligible members or dependents. [FILE] Contributions to the National Social Security Fund (NSSF) more than doubled to Sh59.14 billion over the year ending June 2024 following the higher rates that came into effect early 2023. This was a 132 per cent growth from Sh26.867 billion that workers paid to NSSF as savings for their retirement. NSSF increased monthly contributions for salaried Kenyans in February 2023 to Sh1,080 per month-which is matched by the employer-to reach Sh2,160 in the first phase of implementing the NSSF 2013 Act. This was up from the previous contribution of Sh200 that employees previously paid, which was also matched by employers. The Act had been contested over its constitutionality and cases dragged on in court for about a decade but the Court of Appeal in January 2023 ruled that the Act is constitutional, setting the stage for higher contributions. "Member contributions grew by Sh35.41 billion or 132 per cent, from Sh26.87 billion in June 2023 to Sh 62.29 billion in June 2024," said NSSF in its audited financial results for the 2023/24 financial year. Contributions to the State-run fund that is supposed to secure the future of Kenyans in retirement will increase further upon implementation of subsequent phases of the NSSF Act 2013. Following the first phase in 2023 that saw employee contribution go up to Sh1,080, it further went up to Sh2,160 in February 2024 in the second phase of implementation and has gone up again February this year to Sh4,320. Analysts noted that the higher NSSF rates will have multiple effects that include increasing national savings but also reducing disposable incomes for Kenya and operations costs for companies. "The expected increase in NSSF contributions will result in a rise on the national savings rate and individual pension savings. "The immediate impact of the increased NSSF contributions will be a reduction in the net pay of employees that will further reduce their purchasing power," said business consultancy firm KPMG in an analysis earlier in January, adding that this is coming after other raids on the payslip by the government. "From an employer's perspective, this change will lead to higher staffing costs and increased compliance obligation, particularly considering other statutory deductions, such as the Social Health Insurance Fund, the Affordable Housing Levy, and the revised upper PAYE bands that have been implemented over the past two years." NSSF has in the recent past said it expects annual contributions by members to grow to Sh134 billion by 2027. This will partly be on account of higher amounts that employed Kenyans are paying but said it would put in place measures to increase membership and contributions from the informal sector, who are the majority in the workforce but are scantily covered by the higher new contributions being effected. According to data, 84 per cent of Kenyans do not have social security, which condemns many to poverty in retirement, dependency or forced to continue working past retirement age. NSSF is implementing its 2023-2027 strategic plan in which it plans to grow to Sh1 trillion fund by end of the period from Sh311 billion reported over the 2022-23 financial year. Over the year to June 2024, NSSF's net assets grew to Sh400 billion. It also plans to increase the number of Kenyans saving for retirement with NSSF to 5.2 million, a growth of over 70 per cent from three million members in 2023, according to the strategic plan. The growth in the Fund's numbers will also largely be driven by Kenyans working in the informal sector, who largely remain excluded from savings for retirement, as well as those working in the diaspora. At the same time, NSSF said it paid retirees Sh9.71 billion over the year to June 2024, which was a 46 per cent increase compared to the previous year. "Member benefits grew by Sh3.04 billion or 46 per cent, from Sh6.68 billion in June 2023 to Sh9.71 billion in June 2024," the financial report said.

NSSF doubles contributions to sh59.14 billion for year ending June 2024

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NSSF doubles contributions to sh59.14 billion for year ending June 2024

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