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Part of the guideRunning payroll in Nigeria, Ghana and Kenya: an employer's guide
The short answer
From 1 February 2026, Kenyan employers and employees each contribute 6% of pensionable pay to the NSSF, up to an upper earnings limit of KSh 108,000 a month. Tier I covers pay up to KSh 9,000 (KSh 540 each) and Tier II covers pay from KSh 9,001 to KSh 108,000 (up to KSh 5,940 each), so the maximum is KSh 6,480 from each side, or KSh 12,960 in total. Contributions are due by the 9th of the following month.
Kenya's National Social Security Fund contributions have risen every February since 2023 as the NSSF Act, 2013 is phased in. February 2026 brought the fourth step, the largest so far for higher earners. This article explains the tiers, shows the numbers at three salary levels and sets out what to expect next. For PAYE, SHIF and the housing levy, and for Nigeria and Ghana, see our payroll guide for Nigeria, Ghana and Kenya.
How the two tiers work
The contribution rate is fixed at 6% from the employee and 6% from the employer. What changes each year are the two earnings limits that define the tiers.
- Lower earnings limit (LEL)
- KSh 9,000 a month from February 2026. Pay up to this amount falls in Tier I.
- Upper earnings limit (UEL)
- KSh 108,000 a month from February 2026, set at three times the national average monthly earnings. Pay between the LEL and the UEL falls in Tier II.
- Tier I
- 6% each on pay up to the LEL, always paid to the NSSF. Maximum KSh 540 each.
- Tier II
- 6% each on pay between the LEL and the UEL. Paid to the NSSF, or to a private scheme registered with the Retirement Benefits Authority if the employer has contracted out. Maximum KSh 5,940 each.
Pay above KSh 108,000 attracts no further NSSF contribution.
What changed in February 2026
| Year 3 (from February 2025) | Year 4 (from 1 February 2026) | |
|---|---|---|
| Lower earnings limit | KSh 8,000 | KSh 9,000 |
| Upper earnings limit | 2 × national average earnings (about KSh 72,000, implied by the Year 4 figure; confirm with the NSSF notice) | 3 × national average earnings (KSh 108,000) |
| Maximum Tier I, each side | KSh 480 | KSh 540 |
| Maximum Tier II, each side | KSh 3,840 | KSh 5,940 |
| Maximum total, each side | KSh 4,320 | KSh 6,480 |
| Maximum combined | KSh 8,640 | KSh 12,960 |
The Year 3 figures above are derived rather than taken from the NSSF's own notice, so check them before relying on them. On those figures, for anyone earning KSh 108,000 or more, the employee's deduction rose by KSh 2,160 a month, and the employer's cost rose by the same amount. For a company with 30 staff at or above the ceiling, that is an extra KSh 64,800 a month in employer contributions, or KSh 777,600 a year.
What it did to take-home pay
The higher deduction is partly offset by lower tax, because NSSF is deducted before PAYE. For an employee on KSh 150,000 a month, whose taxable pay sits in the 30% band, the extra KSh 2,160 of NSSF reduces PAYE by KSh 648. Take-home pay therefore fell by KSh 1,512 a month, not the full KSh 2,160. The employee's retirement savings, counting both sides, rose by KSh 4,320 a month. Employers who explain this arithmetic in a short note to staff when the February payslip arrives tend to field fewer complaints about a smaller net figure.
Worked examples
| Monthly pensionable pay | Tier I (each) | Tier II (each) | Employee total | Employer total | Combined |
|---|---|---|---|---|---|
| KSh 6,000 | KSh 360 | KSh 0 | KSh 360 | KSh 360 | KSh 720 |
| KSh 50,000 | KSh 540 | KSh 2,460 | KSh 3,000 | KSh 3,000 | KSh 6,000 |
| KSh 108,000 | KSh 540 | KSh 5,940 | KSh 6,480 | KSh 6,480 | KSh 12,960 |
| KSh 200,000 | KSh 540 | KSh 5,940 | KSh 6,480 | KSh 6,480 | KSh 12,960 |
Take the KSh 50,000 case. Tier I is 6% of KSh 9,000, which is KSh 540. Tier II is 6% of the KSh 41,000 between KSh 9,000 and KSh 50,000, which is KSh 2,460. The employee pays KSh 3,000 and the employer matches it.
How NSSF affects PAYE
The employee's NSSF contribution is deducted before PAYE is calculated, together with any other registered pension contributions, up to KSh 30,000 a month in total. For the KSh 50,000 employee, after NSSF of KSh 3,000, SHIF of KSh 1,375 and the housing levy of KSh 750, taxable pay is KSh 44,875 and PAYE after personal relief is about KSh 5,845.85. Our article on SHIF and the housing levy explains those two deductions.
Contracting out of Tier II
Employers that already run a good occupational pension scheme can direct Tier II contributions to it instead of to the NSSF. The scheme must be registered with the Retirement Benefits Authority (RBA) and meet the statutory requirements, and the employer must notify the RBA in writing at least 60 days before the switch. Tier I contributions always go to the NSSF.
Contracting out can make sense where the private scheme offers better governance, investment choice or member services, but it adds administration: two remittances each month, two sets of member records, and a scheme to oversee. Smaller employers usually keep both tiers with the NSSF. Whichever route you choose, the amounts deducted from staff are the same; only the destination of the Tier II money changes, and employees should be told in writing where their Tier II savings are held.
What comes next, and the monthly routine
The NSSF Act's fixed phase-in schedule ends with Year 4. From Year 5 onwards, the upper earnings limit is set at four times the national average monthly earnings, and the lower limit at an amount the Cabinet Secretary prescribes, with changes made by Gazette notice rather than on a fixed timetable. As an illustration only: if national average earnings stayed at KSh 36,000, a UEL of four times that would be KSh 144,000, and the maximum contribution would rise to KSh 8,640 from each side. Watch for the Gazette notice before budgeting for 2027.
- Check each February whether the earnings limits have changed, and update payroll before the first run of the month.
- Calculate Tier I and Tier II separately, so each can be remitted to the right fund if you have contracted out.
- Deduct the employee's share before PAYE.
- Set aside both shares on pay day.
- Remit by the 9th of the following month and keep the receipts. The payroll deadlines article lists the other Kenyan dates.
Where Pryme fits
Pryme payroll covers Kenya as well as Nigeria and Ghana. The Pryme business account holds NGN, USD, GBP and EUR, so ask us how shilling salaries and remittances are funded and paid before you plan your first Kenya run. Whatever the route, the duties in this article stay with you as employer: set both shares of NSSF with PAYE, SHIF and the housing levy aside on pay day and remit by each deadline, the 9th for NSSF. Above a threshold you set, a second named approver must sign off before money moves, and bulk payouts check account names before you approve. Finance and Compliance agents, built and certified by Pryme Intelligence, a separate company, prepare the work inside a mandate you set; nothing moves without approval, above the mandate's ceiling a person decides, and each step sits on an audit trail. The full three-country picture is in our employer's payroll guide.
Questions people ask
What is the NSSF rate in Kenya in 2026?
6% of pensionable pay from the employee and 6% from the employer, up to an upper earnings limit of KSh 108,000 a month from 1 February 2026.
What is the maximum NSSF deduction in 2026?
KSh 6,480 a month from the employee, matched by KSh 6,480 from the employer: KSh 540 in Tier I and KSh 5,940 in Tier II on each side.
What is the difference between NSSF Tier I and Tier II?
Tier I covers pay up to the lower earnings limit of KSh 9,000 and always goes to the NSSF. Tier II covers pay from KSh 9,001 to KSh 108,000 and can go to an RBA-registered private scheme if the employer contracts out.
When is NSSF due in Kenya?
By the 9th of the month after the salary is paid.
Is NSSF deducted before PAYE in Kenya?
Yes. The employee's contribution reduces taxable pay, within the overall pension deduction limit of KSh 30,000 a month.
Sources
- PwC Kenya: Tax alert, Year 4 NSSF rates 2026 · accessed Oct 2026
- PwC Worldwide Tax Summaries: Kenya, individual, other taxes · accessed Oct 2026
- Kenya Revenue Authority: PAYE · accessed Oct 2026
- DLA Piper: Recent employment law reforms in Kenya · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.