TSC teachers' new deductions that will appear on their February pay slips.

TSC teachers’ new deductions that will appear on their February pay slips.

The government intends to increase National Social Security Fund (NSSF) deductions by 6% starting next year, which will result in lower take-home pay for Kenyan teachers and other employed individuals.

Employees will pay up to Ksh4320 per month under the new statutory deduction, which will go into effect in February, instead of the Ksh2160 that employers and employees presently contribute.

The NSSF Act of 2013 includes the new rule, which is presently being phased in. Kenyans who work would have 6% of their pay withheld.

As part of the government’s initiative to improve remittance to the security fund, the deduction will be put into effect on February 1, 2025.

The Act states that the top earnings limit has been raised to Ksh29,000, with this group of employees expected to contribute more, and the lower earnings limit, or the amount that is deemed the lowest pensionable salary, has been raised to Sh9,000 from the existing Sh7,000.

For example, after all the statutory deductions, including the Housing Levy, the Social Health Authority, the NSSF, and Pay As You Earn (PAYE), an employee with an average salary of Ksh40,000 would only receive Ksh32,000.

After all statutory deductions, an employee making Ksh50,000 will receive a net pay of Ksh38,000, and an employee making Ksh70,000 will receive Ksh53,000 after the deductions.

In other words, the deductions would be based on an individual’s earnings, and the employer would have to match the employee’s salary with the deduction when sending the money.

Despite being passed into law in 2013, the Act wasn’t put into effect until 2023, following a ten-year legal battle to have the Act repealed. Nonetheless, the Court of Appeal gave the government flexibility to carry out the Act in 2022.

The most recent development coincides with the government’s intention to enact a number of tax changes in the three tax bills that are presently being discussed by the public.

In an attempt to close the budget deficit after the Finance Bill 2024 was withdrawn, the National Treasury created the Tax Procedures (Amendment) Bill, the Tax Laws (Amendment) Bill, and the Business Laws (Amendment) Bill.

Kuria Kimani, a Molo MP, led the National Assembly Committee for Finance and National Planning in concluding public hearings of the measures on Thursday, opening the door for additional parliamentary approval.

TSC teachers’ new deductions that will appear on their February pay slips.

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