An Advisory by Atlas Associates LLP
We would like to notify employers and employees of upcoming changes to the National Social Security Fund (NSSF) contribution structure taking effect on 1 February 2026.
As part of the ongoing phased implementation of the NSSF Act, 2013, both the Lower Earnings Limit (LEL) and Upper Earnings Limit (UEL) will be adjusted upward. While the contribution rate for both employers and employees remains at 6%, the widened earnings bands mean individuals earning above the new thresholds will see higher statutory deductions.
These changes will influence employees’ net pay and require updates to employers’ payroll planning and compliance processes. Organizations are encouraged to review their payroll systems to ensure a smooth transition.
Key Features of the NSSF Structure (2026 Updates)
- Tier I (Lower Earnings): Applies to pensionable earnings up to Ksh 9,000, with contributions remitted to NSSF.
- Tier II (Upper Earnings): Applies to earnings above Ksh 9,000 up to the Upper Limit of Ksh 108,000.
- Contribution Rates: Both employer and employee contribute 6% each, totaling 12% of pensionable income.
- Maximum Contribution: For employees earning above Ksh 108,000, the maximum employee contribution will be Ksh 6,480, matched by the employer.
- Opt-Out Option: Employers can apply to the Retirement Benefits Authority (RBA) to divert Tier II contributions to a private scheme.
Impact on Take-Home Pay
The increased rates, designed to boost long-term savings, will reduce monthly take-home pay for many workers starting February 2026, particularly for those earning above the new Upper Earnings Limit. The changes are part of a five-year phased implementation aimed at strengthening pension adequacy.