Kenyans in formal employment will see their payslips shrink from February 2026 as the next phase of higher National Social Security Fund (NSSF) contribution rates takes effect under the NSSF Act, 2013.
The change is part of a multiyear reform to transform NSSF into a true pension scheme.
Indeed, it will hit middle‑ and high‑income earners hardest even as households already grapple with a high cost of living and multiple new statutory deductions.
What changes in February 2026
From 1 February 2026, NSSF will move into the fourth year of its phased implementation schedule.
Therefore, raise both the earnings bands and the shilling amounts used to calculate contributions.
The lower earnings limit (Tier I) will rise from KSh 8,000 to KSh 9,000, meaning workers at this band will contribute KSh 540 per month (6% of 9,000).
Also, matched by an equal KSh 540 from the employer.
The upper earnings limit (Tier II) will jump from KSh 72,000 to KSh 108,000, expanding the band on which higher earners are charged NSSF at 6%.
For top earners, the maximum employee contribution will increase from KSh 4,320 to about KSh 6,480 per month—an extra KSh 2,160 sliced off the payslip.
Because employers are legally required to match employee contributions, the total going into NSSF for such workers will be KSh 12,960 per month, or 12% of pensionable pay.
Who will feel the pinch?
The 2026 adjustment mainly targets middle‑ and high‑income employees, especially those earning KSh 75,000 and above, who will see noticeable increases in deductions.
Workers earning above about KSh 100,000 will move to the new maximum deduction of around KSh 6,480 per month, up from KSh 4,320, translating to an annual personal contribution of over KSh 77,000.
Employees earning KSh 200,000 or more will still be capped at the Tier II ceiling, with Tier I at KSh 540 and Tier II computed on KSh 99,000, bringing the total employee deduction to KSh 6,480.
By contrast, workers earning below KSh 50,000 will see no change in February 2026, as their contributions remain within the existing thresholds.
Regulators note that about 90% of the country’s 3.2 million formal workers fall below the KSh 108,000 cap, meaning the new maximum mostly targets a relatively small but better‑paid segment.
Bigger payslip burden, but higher pension savings
For employees, the immediate effect is a reduction in take‑home pay, on top of other deductions such as PAYE, the housing levy, and revamped health insurance.
Payroll experts warn that many workers will have to adjust personal budgets as statutory lines on their payslips climb.
Particularly those already stretched by rent, school fees, and loan repayments.
However, retirement regulators emphasize the long‑term benefit: significantly higher, compulsory retirement savings that should reduce old‑age poverty.
The Retirement Benefits Authority reports that annual contributions to NSSF have already jumped from KSh 19.29 billion in June 2022 to KSh 83.97 billion in June 2023 and are projected to pass KSh 100 billion in 2026 as the higher rates bite.
Impact on employers and the wider economy
For employers, the February 2026 change raises the cost of labour, since they must match the 6% contribution for each affected employee.
Firms are being advised to update payroll systems, re‑budget for higher statutory outlays, and communicate clearly with staff to manage expectations and morale.
President William Ruto’s administration defends the reforms as essential to shifting Kenya from a low‑savings economy to one where pensions provide a stronger foundation for investment and social protection.
But critics argue that, implemented alongside other new levies, the higher NSSF rates deepen the short‑term squeeze on already strained household incomes and could dampen consumption.
As February 2026 approaches, both workers and employers are bracing for slimmer payslips and higher payroll bills.
Hoping the promised long‑term gains in retirement security will eventually justify the immediate financial pain.
ALSO READ: Melania Trump: From Slovenian Model to Twice‑Serving US First Lady
