Kenya, Sept. 8 -- The number of Kenyans' savings in NSSF dropped by 47% from Sh1.9 billion to Sh1 billion due to increased monthly deductions of up to Sh4,320. Kenyans have slashed voluntary pension savings by 47 percent in 2024, driven by soaring mandatory contributions to the National Social Security Fund (NSSF) that now reach up to Sh4,320 per month. This sharp drop, from Sh1.92 billion to just Sh1.01 billion in additional voluntary contributions, reflects the heavy financial strain on workers amid economic hardships and growing distrust from NSSF mismanagement scandals.
As President William Ruto's reforms push for national savings to hit Sh1 trillion by 2027, many fear these changes could widen the retirement security gap for everyday employees already grappling with reduced disposable income. The Retirement Benefits Authority (RBA) data reveals how higher NSSF rates, implemented under the 2013 Act, have reshaped retirement planning.
Starting in February 2023, the contribution rates increased from a flat Sh200 to Sh1,080, then doubled to Sh2,160 in 2024, and finally reached Sh4,320 in 2025 for top earners. Employers match these amounts, but the burden falls hardest on workers whose take-home pay shrinks further with added levies like the 1.5 percent housing levy and 2.75 percent Social Health Insurance Fund (SHIF). Real wages eroded by 0.3 percent last year, per Kenya National Bureau of Statistics, as inflation outpaced stagnant salaries, leaving little room for extra pension top-ups.
For those searching voluntary pension savings drop Kenya, this trend signals a tough reality where mandatory deductions crowd out personal savings efforts.Distrust compounds the issue, with past NSSF mismanagement allegations eroding confidence in the fund's ability to deliver reliable benefits.
Workers, facing a softer economy and business uncertainties, prioritize immediate needs over long-term retirement boosts. Yet, the pension industry grew 21 percent to Sh2.23 trillion in 2024, largely thanks to mandatory NSSF inflows, covering 7.53 million members or 26.57 percent of the working-age population.
RBA CEO Charles Machira notes improved sensitisation and policy measures drove this, but the voluntary side lags, with additional contributions and medical funds declining as focus shifts to basics.
Ruto's ambitious goal to amass Sh1 trillion in national savings by 2027 aims to transform Kenya's social security landscape, but critics argue it overlooks workers' realities. Enhanced NSSF contributions are meant to build a stronger safety net, potentially yielding Sh20 million pensions for consistent savers, but without addressing mismanagement or economic pressures, the voluntary pension savings drop could persist.
As rates climb to Sh6,480 in 2026, employees earning Sh30,000 now lose Sh1,800 monthly to NSSF alone, prompting calls for offsets in private schemes. Only 38 percent of 1,032 pension schemes got RBA approval to adjust, leaving most workers double-dipping without relief.
The voluntary pension savings drop by 47 percent shows a pivotal moment for Kenya's workforce. With NSSF reforms boosting mandatory flows to Sh59.1 billion in 2024, the overall system thrives, but individual financial health suffers.
Balancing national ambitions with personal affordability will be key to rebuilding trust and encouraging extra savings.
In conclusion, the 47 percent voluntary pension savings drop in 2024 highlights how NSSF's mandatory contributions of up to Sh4,320 monthly are squeezing Kenyan workers.
Amid economic woes and fund distrust, Ruto's Sh1 trillion savings target by 2027 risks deepening divides unless paired with transparency and relief measures. As the pension landscape evolves, prioritizing worker input could turn this challenge into a stronger, more inclusive retirement future.
Published by HT Digital Content Services with permission from Bana Kenya.