Petitioner seeks to block higher NSSF deductions

A city resident has sought High Court orders to block the enhanced National Social Security Fund (NSSF) contributions as proposed in the NSSF Act 2013.

The NSSF board published a notice in the local dailies on January 12, 2024, compelling all employees to implement Year Two Contribution Rates, following the lapse of the first year of contribution.

John Maina Ndegwa said in the petition the board has failed to guide employers on how to implement the Act, causing confusion and anxiety in the public and private sectors.

“That there is a looming uncertainty as to whether or not the graduated national average earnings are to be based on the 2013 rates or current rates,” he said.

Read: Confusion over new NSSF deduction as first year ends

The government started implementing the Act last February, raising mandatory contributions from a flat Sh200 per employee (with an equivalent contribution from the employer) to a graduated plan that will eventually hit six percent of employees’ salaries.

The implementation of the law requires that the deductions be raised to specific amounts or percentages over the first four years.

Mr Ndegwa said the amount sought in the pension contribution is colossal and unreasonable coming at a time when Kenyan employees are weighed down by the high cost of living compounded by other statutory deductions.

He said employees will continue to suffer due to the ever-increasing high cost of living with minimal earning capacity unless the court intervenes.

The third schedule of the NSSF Act, 2013 spells in Section 3 the amount chargeable within the first four years after the commencement of the Act.

The NSSF set the lower and upper earnings limit at a monthly salary of Sh6,000 and Sh18,000 respectively, which effectively saw employees earning Sh6,000 contribute Sh360 while those pocketing Sh18,000 and above take a Sh1,080 shave. The upper limits on contributions are to rise every year.

Read: Employers’ headache as pay deductions cross two thirds

The new rates took effect last year after the Court of Appeal reinstated the NSSF Act 2013, ending a seven-year impasse.

Mr Ndegwa has named the Labour minister, Social Protection and Senior Citizens Affairs PS, the NSSF board and the Attorney General as respondents in the case. The city resident said the outcome of the fresh deductions would impact negatively on the economy because more employers will have to declare their workers redundant or close production services due to the increased staff costs.

“That the Regulations of Wages (General amendment) order, 2022 under legal Notice No.125 be declared null and void because the said Cabinet secretary did not have power to make such order given that the four-year requirements in the third schedule of the NSSF Act 2013 had not yet lapsed,” he said.

He wants the court to temporarily suspend the implementation of the new rates, pending the determination of the petition.

He will be urging the court to revoke the notices issued on January 12 and the Year 2 Contributions Rates be declared null and void.

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