Workers' retirement plans at risk as unremitted pensions shoot to Sh14 billion
Business
By
Graham Kajilwa
| Sep 18, 2025
Unremitted contributions to pension schemes more than doubled to Sh14 billion as businesses struggled with the second phase of enhanced deductions to the National Social Security Fund (NSSF) that kicked in February 2024.
Data from the Retirement Benefit Authority (RBA) also shows that this is the period post-retirement medical fund dropped drastically to Sh249.1 million.
Additionally, contributions to individual retirement pot dropped as well, by 47.2 per cent.
The figures show how both employers and employees struggled with enhanced contributions to the mandatory contributions as per the NSSF Act, 2013.
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Last year marked the implementation of the second phase of the Act that came into force in 2023 under President William Ruto, after a decade of court battles.
The third phase commenced in February 2025.
But unlike the third phase that only affects a handful of workers whose pay band is higher due to the Sh72,000 upper earning limit, the second phase affected a majority as contributions went up to 2,160 from Sh1,080.
This contribution is also matched by employers. This increases employee costs per head by Sh1,960 in just a year after.
Since February 2025, this figure has been enhanced to Sh8,640 for both employee and employer contributions further increasing employee cost by Sh8,440, compared to the Sh200 paid before the Act was enforced.
The increase in 2024 was as a result of the lower earning limit going up from Sh6,000 to Sh7,000 for tier one deductions, while the upper earning limit doubled to Sh36,000 for tier two deductions.
As such, tier one deductions at six per cent of the lower limit went up from Sh360 to Sh420 and upper limit increased as well from Sh720 to Sh1,740. This brought the total contribution to Sh2,160 which is matched by the employer to make Sh4,320.
From the RBA data, this strain has been evident for both employees and employers.
Contributions dropped
“Unremitted contributions continued to rise in 2024, largely driven by a sharp increase in amounts due within 30 days which more than doubled,” says RBA in its 2024 statistical analysis of the pension industry. “While contributions overdue by more than 30 days remained relatively stable, the large number of unremitted amounts highlights ongoing challenges in timely remittance, especially for public sector.”
According to the data set, contributions due less than 30 days stood at Sh9.4 billion in 2021 but dropped to Sh6.3 billion in 2022 and rose slightly to Sh6.3 billion in 2023. In 2024, this figure more than doubled to Sh14.0 billion, a 123.6 per cent growth.
For contributions due more than 30 days, the amounts stood at Sh25.3 billion in 2021, Sh36.6 billion in 2022, Sh55.5 billion in 2023 and Sh55.4 billion in 2024, a slight drop of 0.2 per cent.
In total, unremitted contributions increased from Sh61.8 billion in 2023 to Sh69.4 billion in 2024, a 12 per cent increase.
NSSF demands that contributions to the kitty are submitted by the 9th of the subsequent month.
The doubling of NSSF rates in 2024 also saw either a reduction or withdrawal from post-retirement medical fund (PRMF) as the amounts contributed dropped by 60.1 per cent. This is from Sh625.0 million in 2023 to Sh249.1 million in 2024.
Additionally, members’ own voluntary contributions to their pension schemes dropped by 47.2 per cent from Sh1.9 billion to Sh1.01 billion in 2024.
This is while employers’ and members’ normal contributions grew by 24.15 per cent and 34.33 per cent respectively. Employers’ normal contributions increased from Sh110.1 billion in 2023 to Sh136.7 billion in 2024.
Members’ normal contributions increased from Sh87.0 billion in 2023 to Sh116.8 billion in 2024.
“Total contributions rose significantly in 2024, largely driven by increased employer and member contributions following the implementation of enhanced NSSF rates. While normal contributions from both parties showed strong growth, additional voluntary contributions and medical fund contributions declined, suggesting a shift in focus toward mandatory contributions,” says RBA in the report.