County Workers Could Face Additional 7.5% Salary Deduction Under Proposed Retirement Law

County government employees could soon have an additional 7.5 per cent deducted from their salaries if a new retirement scheme proposed under a Bill before Parliament becomes law.

The proposed deduction is contained in the County Governments Retirement Scheme Bill, 2026, which seeks to create a common retirement benefits system for eligible county government officials, public officers and other employees.

If approved and enacted, the proposed scheme would require eligible county workers to contribute at least 7.5 per cent of their pensionable earnings every month towards their retirement savings.

The contribution would come on top of other statutory deductions that employees may already be required to pay, including NSSF contributions, the Social Health Insurance Fund (SHIF), the Affordable Housing Levy and Pay As You Earn (PAYE).

However, unlike PAYE and other statutory charges that are paid to the government, the proposed pension contribution would be placed into a retirement savings scheme for the employee’s future benefit.

How the Proposed Deduction Would Affect Salaries

The additional contribution could have a noticeable impact on the amount of money county employees take home each month.

For example, a county employee earning Ksh50,000 in pensionable emoluments would be required to contribute at least 7.5 per cent of that amount.

This would translate to a monthly contribution of Ksh3,750.

The Ksh3,750 would be set aside for the employee’s retirement before the worker receives their remaining salary, alongside other deductions that may apply.

The Bill states that a member of the proposed scheme would be required to continue making the contribution for as long as they remain employed by a participating county government or other sponsor.

The proposed legislation states that a member shall contribute not less than 7.5 per cent of their pensionable emoluments for the entire period they remain in employment under a participating sponsor.

County Governments Would Also Contribute

The proposed retirement arrangement would not place the entire financial responsibility on employees.

County governments and other participating sponsors would also be required to contribute towards the retirement savings of their workers.

Under the proposed framework, an employer could contribute an amount of up to twice the employee’s contribution or 20 per cent of the employee’s pensionable emoluments, whichever is lower.

For instance, where an employee contributes the minimum 7.5 per cent, the employer could contribute up to an additional 15 per cent of the worker’s pensionable earnings.

This arrangement would effectively increase the amount being saved for the employee’s retirement while also giving county workers an employer-funded benefit.

Pension Contributions Could Get Priority

The Bill also proposes measures aimed at ensuring county governments do not delay the payment of retirement contributions.

Under the proposed system, any pension contributions owed by a county government could be charged directly to the County Revenue Fund as a first charge.

This would potentially give retirement contributions greater priority when counties are distributing their available funds and could help protect workers from delays in receiving their pension savings.

The proposal comes at a time when county governments have on various occasions faced financial challenges, including delays in receiving funds and difficulties meeting their financial obligations.

By making pension contributions a first charge on the County Revenue Fund, the proposed law would seek to ensure that retirement savings are protected even when a county faces competing financial demands.

Penalties for Delayed Contributions

County governments and other sponsors that fail to remit the required contributions on time could also face additional financial costs under the proposed law.

The Bill proposes that any outstanding contribution would attract interest equivalent to 5 per cent of the unpaid amount for every month it remains outstanding.

This provision is intended to encourage employers to remit employees’ pension contributions on time and prevent workers from losing out because of delays by their employers.

It would also place greater responsibility on county governments and other participating sponsors to ensure that deductions made from employees’ salaries are transferred to the retirement scheme as required.

When Employees Could Access Their Benefits

The proposed retirement scheme would also provide circumstances under which members could access their benefits before reaching the mandatory retirement age.

According to the proposed framework, members could become eligible to access their retirement benefits in certain situations, including resignation, dismissal, ill health and emigration.

However, access would not necessarily be automatic. Employees would have to meet the conditions and requirements set out under the proposed law before receiving their benefits.

The provisions are intended to provide some protection for workers who leave employment under circumstances that may prevent them from continuing to contribute to the scheme.

Bill Still Needs Parliament’s Approval

Despite the proposed changes, county employees will not immediately begin making the additional 7.5 per cent contribution.

The County Governments Retirement Scheme Bill, 2026, is still going through the legislative process and must be considered and approved by Parliament before it can become law.

The proposal could also undergo changes during parliamentary debate before a final version is approved.

If enacted in its current form, however, the law would introduce a uniform retirement benefits framework for eligible county government employees and establish mandatory contributions from both workers and their employers.

For county workers, the main immediate effect would be a reduction in monthly take-home pay because at least 7.5 per cent of their pensionable earnings would be directed towards retirement savings.

At the same time, employees would benefit from an additional contribution from their employer, potentially allowing them to build a larger retirement fund over the course of their employment.

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