NAIROBI, Kenya, Feb 6 – Global audit firm KPMG has warned that the newly implemented National Social Security Fund (NSSF) contribution model will reduce the purchasing power of employed Kenyans by lowering their disposable income.
In its latest report, the tax advisory firm notes that higher NSSF contributions will directly impact net pay, straining household budgets.
KPMG also highlights the added burden on employers, who will face higher staffing costs and increased compliance obligations alongside other statutory deductions, including the Social Health Insurance Fund (SHIF), the Affordable Housing Levy, and the revised PAYE tax bands introduced in recent years.
This marks the third phase of the NSSF Act of 2013 implementation, which gradually increases contribution rates over five years to enhance **retirement benefits.
The updated model introduces two contribution tiers. Employees earning Sh7,000 – Sh8,000 will contribute between Sh420 and Sh480, matched by their employers, bringing total contributions to Sh840 – Sh960. Those earning Sh29,000 – Sh36,000 will contribute 6% of their salary, with employers matching the amount, resulting in contributions between Sh3,480 and Sh8,640.
Previously, both employees and employers contributed a flat rate of Sh200 per month, with total contributions capped at Sh400.
While the changes may strain workers’ finances, KPMG notes that in the long run, the new model could increase national savings and boost financial security in retirement.
The government argues the adjustments will ensure better retirement preparedness, but concerns remain over their short-term impact on consumer spending and business operations.
