Ruto on NSSF contributions hike: ‘We’ll double our 60-year savings by end of 2025’

President William Ruto has praised the increased contributions to the National Social Security Fund (NSSF) as a step toward the country’s financial security.

Ruto’s administration in 2023 introduced amendments that saw the introduction of increased contribution rates to the state-owned pension scheme and the expansion of the contribution base to include workers in the informal sector.

The President on Wednesday said that by the end of 2025, Kenya will double its savings over the last 60 years with contributions from the last three years.

“By 2027, we will have saved Ksh.1 trillion. All this is because we have made bold decisions,” Ruto said at the Cooperative University of Kenya in Karen, Nairobi.

“Many people don’t believe what I'm saying, but you will be shocked. That is how to transform a nation, and I am going to confound the naysayers.”

Ruto said Kenya had long lagged behind smaller neighbouring economies such as Uganda and Tanzania in pension contributions, until his government made “the right decision” and increased the monthly NSSF deductions.

“How is saving Ksh.200 monthly okay? How does it amount to a saving? Uganda and Tanzania have bigger social security funds than Kenya, although they have a smaller economy; they made the right decisions,” he said.

Last year, NSSF adopted a tiered contribution system to replace the previous flat-rate contributions.

Tier I contributions are for pensionable earnings up to the lower earnings limit (Ksh.7,000 monthly), while Tier II contributions apply to earnings over that.

While Tier I contributions are paid directly to the NSSF, employers were given the option of directing Tier II contributions to a contracted-out or set-up scheme.

Employees part with six per cent of their monthly gross pay to the fund, which is matched by their employers.

In 2024, the maximum deduction was Ksh.2,160 from the employee and an equal amount from the employer, totalling Ksh.4,320.

But from February 2025, the employee’s maximum deduction was raised to Ksh.4,320, plus a matching employer contribution, totalling Ksh.8,640. 

Recent data from the Retirement Benefits Authority (RBA) shows that Kenyans’ contributions towards pension schemes have nearly doubled since 2022.

Pension contributions over the last three years have risen from Ksh.62.73 billion for the half year ending June 2022 to Ksh.118.80 billion for the half ending December 2024.

For the six months ending in December 2022, pension contributions were Ksh.70.26 billion, then climbed to Ksh.83.14 billion in the half-year up to June 2023 and further to Ksh.105.65 in the second half of 2023.

Last year, Kenyans contributed Ksh.116.10 billion in the first year-half, before taking it up to Ksh.118.80 billion in the second half.