Kenyans to Face Bigger NSSF Deductions From February 2026 as Contribution Rates Rise
Kenyans in formal employment will take home less pay from February 2026 after the next phase of higher National Social Security Fund (NSSF) contribution rates comes into force under the NSSF Act, 2013.
The increase is part of a multi-year reform programme aimed at transforming NSSF from a basic savings scheme into a fully funded pension system. However, the move will hit middle- and high-income earners hardest, at a time when households are already grappling with a high cost of living and multiple statutory deductions.
What Changes in February 2026
From 1 February 2026, NSSF enters the fourth year of phased implementation, raising both the earnings bands and the shilling amounts used to calculate contributions.
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Tier I (Lower Earnings Limit):
The pensionable minimum will rise from KSh 8,000 to KSh 9,000.
Employees will contribute 6% (KSh 540) per month, matched by KSh 540 from employers. -
Tier II (Upper Earnings Limit):
The ceiling will jump from KSh 72,000 to KSh 108,000, significantly expanding the income range charged NSSF at 6%.
For top earners, the maximum employee contribution will rise from KSh 4,320 to about KSh 6,480 per month—an extra KSh 2,160 deducted from monthly pay.
Because employers must match employee contributions, total monthly NSSF savings for such workers will reach KSh 12,960, equivalent to 12% of pensionable pay.
Who Will Feel the Pinch
The 2026 adjustment primarily affects middle- and high-income employees, especially those earning KSh 75,000 and above.
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Workers earning over KSh 100,000 will hit the new maximum deduction of KSh 6,480, translating to over KSh 77,000 annually from personal income.
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Employees earning KSh 200,000 or more will remain capped at the Tier II limit, with Tier I at KSh 540 and Tier II calculated on KSh 99,000.
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Workers earning below KSh 50,000 will see no change in February 2026, as their contributions remain within existing thresholds.
Regulators estimate that about 90% of Kenya’s 3.2 million formal workers earn below the KSh 108,000 cap, meaning the new maximum mainly targets a smaller, higher-paid segment.
Smaller Payslips, Bigger Retirement Savings
For employees, the immediate impact will be reduced take-home pay, on top of other deductions such as PAYE, the housing levy, and revamped health insurance contributions.
Payroll experts warn that workers may need to adjust household budgets, particularly those already stretched by rent, school fees, and loan repayments.
However, retirement regulators argue the long-term benefits outweigh the short-term pain. According to the Retirement Benefits Authority, annual NSSF contributions jumped from KSh 19.29 billion in June 2022 to KSh 83.97 billion in June 2023, and are projected to exceed KSh 100 billion by 2026 as higher rates take full effect.
Impact on Employers and the Economy
Employers will also feel the strain, as they are legally required to match the 6% contribution for affected workers, raising the overall cost of labour.
Firms have been advised to update payroll systems, revise budgets, and communicate clearly with staff to manage expectations.
The administration of William Ruto defends the reforms as essential to strengthening retirement security and boosting long-term savings in the economy.
Critics, however, argue that combined with other new levies, higher NSSF rates intensify short-term pressure on household incomes and could dampen consumer spending.
As February 2026 approaches, both workers and employers are bracing for slimmer payslips and higher payroll costs, hoping the promised retirement security will justify the immediate financial sacrifice.