Voluntary NSSF savings slump 47pc as higher deductions take effect
Currently, employees earning Sh30,000 contribute Sh1,800 per month, those on Sh50,000 remit Sh3,000, while anyone earning Sh80,000 and above pays the maximum Sh4,320. Employers are required to match the workers’ contributions.
Voluntary savings into the National Social Security Fund (NSSF) dropped sharply in 2024 as workers grappled with rising mandatory deductions under the new pension framework.
Data from the Retirement Benefits Authority (RBA) shows that additional voluntary contributions (AVC) fell by 47 per cent, shrinking from Sh1.92 billion in 2023 to Sh1.01 billion last year.
The regulator attributed the decline to the sharp increase in compulsory monthly contributions, which for top earners now stand at Sh4,320.
“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.
The steep deductions follow the enforcement of the National Social Security Fund Act 2013, which was cleared for implementation in February 2023.
At that time, monthly deductions rose from a flat Sh200 per worker to Sh1,080. The amount doubled to Sh2,160 in February 2024 and doubled again in February 2025 to reach Sh4,320. Another rise is due in February 2026, when contributions are expected to grow by 50 per cent to a ceiling of Sh6,480.
Currently, employees earning Sh30,000 contribute Sh1,800 per month, those on Sh50,000 remit Sh3,000, while anyone earning Sh80,000 and above pays the maximum Sh4,320.
Employers are required to match the workers’ contributions.
For top earners, this translates to Sh480 going directly to the NSSF, while the remaining Sh3,840 can be channelled into an employer’s occupational or umbrella pension scheme.
However, employers who wish to opt out of NSSF contributions must first seek approval from the RBA.
Despite the fall in voluntary savings, overall contributions into the NSSF more than doubled in 2024. The statutory scheme collected Sh59.1 billion, compared to Sh25.3 billion the previous year, after the second instalment of the graduated rate increase was applied.
Total pension contributions across all schemes rose by 29 per cent, reaching Sh263.4 billion in 2024, up from Sh204.9 billion in 2023.
The share of NSSF contributions within the total climbed to 22.4 per cent from 10.9 per cent, showing that the statutory fund is taking up a growing share of retirement savings compared to private pension plans.
“Total contributions rose significantly in 2024, largely driven by increased employer and member contributions following the implementation of enhanced NSSF rates,” RBA said.
