Kenyan employers and employees are set to experience higher statutory pension contributions following new guidelines issued by the National Social Security Fund (NSSF) ahead of the final phase of its phased implementation.
Starting 1 February 2026, monthly Tier II pension deductions will rise to Ksh5,940 for both employers and employees.
NSSF has clarified that employers may still opt to channel their Tier II contributions to approved private pension schemes.
The RBA notes that it must be notified in writing at least 60 days before the intended transition to a contracted‑out arrangement.
Also Read: Everything You Need to Know to Register for NSSF
Final Phase of NSSF Contribution Rollout
The new contribution framework forms part of the final stage of the four-year transition introduced under the NSSF Act No. 45 of 2013.
The reforms are part of a five-year phased framework that has steadily raised mandatory pension contributions since February 2023, with the stated aim of strengthening retirement income security and expanding the coverage of formal pension savings.
Under the Year 4 adjustments, the Lower Earnings Limit (LEL) rises to Ksh9,000, and the Upper Earnings Limit (UEL) increases to Ksh108,000.
NSSF contributions remain at 12 percent of pensionable earnings, shared equally between employer and employee.
| Category | Amount (KES) |
|---|---|
| Lower Limit (Tier I) | 9,000 |
| Employee Contribution (6%) | 540 |
| Employer Contribution (6%) | 540 |
| Total Tier I Contribution | 1,080 |
For Tier I, contributions apply to earnings up to Ksh9,000; for Tier II, contributions apply to income between Ksh9,001 and Ksh108,000.
The maximum mandatory monthly contribution now stands at Ksh12,960, split evenly between both parties.
| Category | Amount (KES) |
|---|---|
| Upper Limit (Tier II) (UEL) | 108,000 |
| Lower Limit (LEL) | 9,000 |
| Pensionable Amount (UEL – LEL) | 99,000 |
| Employee Contribution (6%) | 5,940 |
| Employer Contribution (6%) | 5,940 |
| Total Tier II Contribution | 11,880 |
| Maximum Mandatory NSSF Contribution | 12,960 |
According to NSSF, from year 5 (2027) onwards, any adjustments to contribution limits will be implemented through Gazette Notices issued by the Cabinet Secretary for Labour and Social Protection.
Private Pension Schemes Remain an Option
NSSF has reaffirmed that Employers who do not prefer making their Tier II contribution direct to the Fund and prefer remitting their contribution to a private pension scheme through a contracted-out arrangement provided:
- The scheme is registered with the Retirement Benefits Authority (RBA)
- The private scheme meets the statutory requirements.
The RBA must also be notified in writing at least 60 days before the intended transition to a contracted‑out arrangement.
Also Read: KRA Announces Date Nil Tax Filings Will be Restored After Suspension
Deductions to affect Kenyan pay slips
On the other hand, employees earning Ksh200,000 or more will hit the Tier II ceiling. In this case, Tier I remains at Ksh540, while Tier II is calculated on Ksh99,000, resulting in a deduction of Ksh5,940.
The total employee contribution will therefore rise to Ksh6,480 per month, with employers required to match the same amount, pushing total monthly remittances to the Fund to Ksh12,960 for top earners.
Workers earning below Ksh50,000 will not be affected by the 2026 adjustment, as their contributions remain within the existing thresholds. Contributions for employees earning Ksh25,000, Ksh35,000, and Ksh50,000 will therefore remain unchanged.
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