Kenya, March 5 -- We have looked closely at the changes to NSSF contributions that started on February 1, 2025, and will continue into 2026. Let's explain how these changes affect payslips and deductions.
Employees paid 6% of Sh6,000, which is Sh360.
- For salaries between Sh6,000 and Sh18,000: Employees paid 6% of (Sh18,000 - Sh6,000), which is Sh720.
- Total Contribution: Sh1,080.
NSSF Contributions in 2024:
- The minimum salary changed from Sh6,000 to Sh7,000, and the maximum salary increased to Sh36,000.
- For salaries up to Sh7,000: Employees paid 6% of Sh7,000, which is Sh420.
- For salaries between Sh7,000 and Sh36,000: Employees paid 6% of (Sh36,000 - Sh7,000), which is Sh1,740.
- Total Contribution: Sh2,160.
This means the NSSF deduction doubled from Sh1,080 in 2023 to Sh2,160 in 2024.
NSSF Contributions Starting February 2025:
- The new minimum salary is Sh8,000, and the maximum salary is now Sh72,000.
- For salaries up to Sh8,000: Employees pay 6% of Sh8,000, which is Sh480.
- For salaries between Sh8,000 and Sh72,000: Employees pay 6% of (Sh72,000 - Sh8,000), which is Sh3,840.
-Total Contribution: Sh4,320.
Employees earning Sh72,000 or more will now pay a maximum of Sh4,320, which is double what they paid in 2024. Employers will match this amount, meaning a total of Sh8,640 goes to NSSF for each employee every month.
What to Expect in 2026:
- In 2026, the maximum salary will rise to Sh108,000.
- For salaries up to Sh9,000: Employees will pay 6% of Sh9,000, which is Sh540.
- For salaries between Sh9,000 and Sh108,000: Employees pay 6% of (Sh108,000 - Sh9,000), which is Sh5,940.
- Total Contribution: Sh6,480.
Employees earning Sh108,000 or more will contribute Sh6,480 each month, up from Sh4,320 in 2025.
Examples for 2025 by Salary:
1. For Sh30,000:
- Tier 1: Sh480
- Tier 2: (Sh30,000 - Sh8,000) x 6% = Sh1,320
- Total Contribution: Sh1,800
2. For Sh40,000:
- Tier 1: Sh480
- Tier 2: (Sh40,000 - Sh8,000) x 6% = Sh1,920
- Total Contribution: Sh2,400
3. For Sh50,000:
- Tier 1: Sh480
- Tier 2: (Sh50,000 - Sh8,000) x 6% = Sh2,520
- Total Contribution: Sh3,000
4. For Sh70,000:
- Tier 1: Sh480
- Tier 2: (Sh70,000 - Sh8,000) x 6% = Sh3,720
- Total Contribution: Sh4,200
5. For Sh100,000:
- Tier 1: Sh480
- Tier 2: (Sh72,000 - Sh8,000) x 6% = Sh3,840 (Capped)
-Total Contribution: Sh4,320
- Contributions are capped at Sh4,320 for salaries of Sh72,000 and above.
- Employers will match employee contributions, so the total NSSF amount is twice the employee's share.
- Contributions will increase in 2026, affecting both employees and employers.
- Some employers are moving money from private pension plans to NSSF due to higher contributions, which may lead to lower savings in private pensions for employees over time.
- Private pension plans have traditionally offered better returns than NSSF, making this change significant for workers.
- NSSF contributions lower taxable income, which can reduce income tax deductions, but higher contributions might mean employees take home less money.
- Although total retirement savings remain the same, the shift between NSSF and private pensions might affect investment growth and financial planning.
Published by HT Digital Content Services with permission from Bana Kenya.