New NSSF Rates in Kenya: How Teachers’ Salaries Will Be Affected Starting February 2025

Kenyan teachers are set to experience changes in their payslips following the implementation of new NSSF (National Social Security Fund) contribution rates in February 2025. The adjustments, aimed at increasing retirement savings, will see higher deductions from teachers’ salaries, affecting their take-home pay across different job groups.

Understanding the New NSSF Rates

Previously, NSSF deductions were capped at Ksh 1,080 per month, regardless of salary. However, under the new structure, contributions will be based on a percentage of income:

• Lower Earnings Limit (LEL): Employees earning up to Ksh 6,000 will contribute 6% of their salary, matched equally by the employer.
• Upper Earnings Limit (UEL): Employees earning above Ksh 18,000 will contribute a 6% deduction on their total income, up to the maximum limit allowed.

This means teachers in higher job groups will see larger deductions, while those in lower job groups will still experience a noticeable reduction in take-home pay.

Effect on Teachers’ Salaries Across Job Groups

The new rates will affect teachers differently based on their job group and basic salary. Below is an estimate of the expected deductions across different salary scales:

Impact of the New Deductions

• Junior and Intern Teachers:
  • Teachers on internship or in entry-level job groups (C1, C2) will see deductions increase between Ksh 120 and Ksh 1,120. While the impact may seem small, interns earning Ksh 20,000 will feel the pinch more, as every deduction affects their already limited income.
• Mid-Level Teachers (C3–C4):
  • Teachers in these job groups, including Senior Teachers and Deputy Principals, will see deductions increase by up to Ksh 2,000, reducing their net pay significantly.
• School Administrators (C5–D3):
  • Headteachers and Principals will see a 2,420 – 3,920 increase in deductions, meaning a notable difference in their monthly salary.
• Senior Administrators (D4–D5):
  • Chief Principals and Senior Chief Principals will experience the highest deductions, losing up to Ksh 5,920 per month from their take-home pay.

Pros and Cons of the New NSSF Rates for Teachers

Pros

✅ Better Retirement Savings – Teachers will accumulate higher pension savings, ensuring financial security upon retirement.
✅ Increased Employer Contribution – Since TSC will match teachers’ contributions, the overall retirement package will be larger.
✅ Enhanced Social Security Benefits – Higher savings could translate into better retirement benefits.

Cons

❌ Reduced Take-Home Pay – Teachers will experience lower net salaries, which may affect their monthly budgets.
❌ Increased Financial Strain on Low-Paid Teachers – Interns and those in lower job groups will feel the impact more.

What Should Teachers Do?

With reduced take-home pay, teachers should consider:

1. Budget Adjustments: Plan for lower net income by reducing unnecessary expenses.
2. Side Hustles: Engage in alternative income sources like tutoring, farming, or online work to compensate for the reduced salary.
3. Investing in Other Retirement Plans: Consider SACCOs, pension schemes, or fixed deposits to supplement NSSF savings.
4. Financial Literacy: Attend training on financial planning to make informed savings and investment decisions.

Final Thoughts

The new NSSF rates will impact all Kenyan teachers, with higher job groups seeing larger deductions. While this means less take-home pay, the benefit of improved retirement savings cannot be ignored. Teachers must plan ahead and explore alternative financial strategies to cope with these changes.