Detailed changes in NSSF deductions that will affect Employees Final Pay

NSSF (National Social Security Fund) deductions in Kenya are set to increase effective from 1 February 2026. 

This is not due to a change in the contribution rate (which remains 6% for both employee and employer, totaling 12% of pensionable earnings) but because of the phased implementation of the NSSF Act, 2013. 

The Act schedules progressive increases in the earnings limits over five years (starting from February 2023), expanding the portion of salary subject to contributions.

Key Changes Effective 1 February 2026 (Year 4 of Implementation)

1. Lower Earnings Limit (Tier I): Increases from KSh 8,000 to KSh 9,000 per month. Contribution: 6% employee + 6% employer = KSh 540 each (total KSh 1,080).

2. Upper Earnings Limit (Tier II): Increases from KSh 72,000 to KSh 108,000 per month.

This applies to earnings between KSh 9,001 and KSh 108,000.

Contribution: 6% employee + 6% employer on the Tier II amount.

3. Maximum Employee Deduction: Rises from KSh 4,320 to KSh 6,480 per month (for salaries at or above KSh 108,000).

Employer matches this, so total monthly contribution per employee reaches KSh 12,960.

For lower earners (e.g., up to around KSh 72,000), deductions may stay similar or see minor increases due to the Tier I adjustment, but the biggest impact hits middle- to higher-income workers.

How It Affects Take- Home Pay

1. Employees earning below ~KSh 72,000: Limited or no major change (capped at previous levels in many cases).

2. Employees earning KSh 72,001–108,000: Progressive increase in deductions.

3. Employees earning KSh 108,000+: Full maximum deduction of KSh 6,480 (up by KSh 2,160 from before), reducing net pay by that amount (though NSSF is tax-deductible, providing some PAYE relief).

This comes amid other deductions (e.g., SHIF, Housing Levy, potential PAYE changes), squeezing disposable income further.

Context and Reactions

This is the fourth phase of a planned five-year rollout to boost retirement savings, national pension security, and long-term financial stability. 

The government views it positively for future benefits, but critics (including the Federation of Kenya Employers - FKE) highlight the strain on workers facing high living costs, inflation, and multiple statutory cuts. 

Payslips for February 2026 payrolls will reflect this, and employers must update systems accordingly.

NSSF has issued guidelines confirming these Tier II deductions (e.g., up to KSh 5,940 for the upper tier in some breakdowns, aligning with the 6% on expanded limits). 

No new amendments to the Act are needed—this follows the existing schedule.