Kenyan workers will notice changes to their payslips from February 2026 as new National Social Security Fund (NSSF) contribution limits kick in. Both employees and employers will face higher mandatory pension deductions aimed at boosting long-term retirement savings.

The updates mark the final phase of the NSSF Act, 2013, which gradually increased the Lower Earnings Limit (LEL) and Upper Earnings Limit (UEL). Experts say employees earning less than Ksh50,000 will see minor changes, but higher earners will feel the pinch.

Under the revised structure, total contributions remain 12 per cent of pensionable earnings, split evenly between employee and employer. Contributions up to Ksh9,000 go into Tier I, while amounts above Ksh9,000 and up to Ksh108,000 are credited to Tier II.

PwC explains Tier I contributions will now be Ksh540 per month per employee. Tier II contributions are calculated on earnings above Ksh9,000, meaning higher earners face significantly larger deductions.

For example, an employee earning Ksh50,000 will see only a small increase in deductions. But someone earning Ksh100,000 will pay Ksh540 to Tier I and Ksh5,460 to Tier II. With employer matching, total monthly retirement savings reach Ksh12,000, up from Ksh8,640.

Employees earning Ksh200,000 or more will hit the Tier II ceiling. Tier I remains Ksh540, while Tier II contributions on Ksh99,000 amount to Ksh6,480. With employer contributions, total retirement savings rise to Ksh12,960 per month.

After accounting for PAYE, SHIF, housing levy, and the increased NSSF deduction, take-home pay for higher earners will drop noticeably. However, tax experts stress the deductions are tax-deductible and strengthen long-term retirement security.

Employees earning mid-range salaries will also see contributions calculated across both tiers. While this reduces monthly net pay, contributions up to Ksh30,000 remain eligible for pension tax relief, softening the blow for high earners.

Employers must update payroll systems to reflect the new thresholds. While employer contributions are not shown on payslips, higher contributions increase employment costs, making accurate payroll planning essential.