Pay Cut, Bigger Pensions: Kenyans Face New NSSF Era as Monthly Deductions Double

Kenyan workers are entering a new phase of social security. From February 2026, NSSF deductions have gone up. Both employees and employers now pay more. This change marks Year 4 of the NSSF Act rollout.

Many workers will feel the impact fast. Their take-home pay will reduce. Employers will also spend more on wages. Yet NSSF says the goal is long-term security.The fund has ordered all employers to apply the new rates. They must send the money by the ninth day of every month. Any delay attracts penalties.

The system uses two tiers. Tier One covers income up to KSh 9,000. Both the worker and employer pay six percent. That is KSh 540 each. The total is KSh 1,080.Tier Two covers earnings above that level. It runs up to KSh 108,000. Six percent is charged on that band. This adds KSh 5,940 from the worker. The employer matches the same amount.

Together, the two tiers bring the monthly maximum to KSh 12,960. Half comes from the employee. Half comes from the employer. Anyone earning KSh 108,000 or more pays the full amount.Those earning less will pay less. Their deductions are calculated within the two tiers. This keeps the system fair.

NSSF says the higher contributions will build a stronger fund. The money is invested. It earns returns. Members then benefit.The fund recently announced a 17 percent net interest rate. It applies to the 2024 and 2025 financial year. This was shared during its Annual General Meeting. NSSF said it was proof that savings are growing.

The fund plans to invest more in large projects. These include roads and energy. Such projects bring steady income. They also support the economy.However, not everyone is happy. Many workers worry about rising deductions. Some employers fear higher costs. Small businesses are especially concerned.

The government says the reform is necessary. The NSSF Act was passed in 2013. It faced many delays. It also faced legal battles. Now it is almost fully active.Officials say the new system will protect workers in old age. They also say it will reduce poverty among retirees.

For now, Kenyans must adjust. They will see smaller pay slips. But NSSF promises better pensions.The success of the plan will depend on trust. It will also depend on good management. If done well, millions could benefit.