Updated 19 October 2026
Quick answer: Tier I is the NSSF contribution on the first KSh 9,000 of your monthly pay, and Tier II is the contribution on pay between KSh 9,000 and KSh 108,000. Both are 6% from you and 6% from your employer. Since February 2026, the most an employee pays is KSh 540 for Tier I and KSh 5,940 for Tier II, a total of KSh 6,480 a month. The main practical difference is where the money goes: Tier I always goes to NSSF, while Tier II can go to an approved private or workplace pension scheme if your employer contracts out.
This guide is general information, not financial advice.
Tier I vs Tier II at a Glance (February 2026 Limits)
| Item | Tier I | Tier II |
|---|---|---|
| Pay covered | Up to the lower earnings limit of KSh 9,000 | From KSh 9,000 up to the upper earnings limit of KSh 108,000 |
| Employee rate | 6% | 6% |
| Employer rate | 6% (matching) | 6% (matching) |
| Maximum employee contribution | KSh 540 a month | KSh 5,940 a month |
| Maximum total with employer | KSh 1,080 | KSh 11,880 |
| Who holds the money | Always NSSF | NSSF, or an approved scheme if the employer contracts out |
| Who pays it | Every employee in formal employment | Only employees earning more than KSh 9,000 |
| Tax treatment | Employee contributions are deducted before PAYE is worked out | |
Why There Are Two Tiers
The NSSF Act of 2013 replaced the old contribution, which was capped at KSh 200 each from the employee and employer, with a percentage of pay. To stop the jump from hurting low earners and employers, the Act set a lower earnings limit and an upper earnings limit and raised them step by step each February. Pay up to the lower limit forms Tier I. Pay between the two limits forms Tier II. Anything above the upper limit is not counted at all.
The phase-in has run like this:
| From | Lower limit (Tier I) | Upper limit | Max employee Tier I | Max employee Tier II |
|---|---|---|---|---|
| February 2023 | KSh 6,000 | KSh 18,000 | KSh 360 | KSh 720 |
| February 2024 | KSh 7,000 | KSh 36,000 | KSh 420 | KSh 1,740 |
| February 2025 | KSh 8,000 | KSh 72,000 | KSh 480 | KSh 3,840 |
| February 2026 (current) | KSh 9,000 | KSh 108,000 | KSh 540 | KSh 5,940 |
From February 2027 the upper limit is expected to follow national average earnings published by the Kenya National Bureau of Statistics, so check NSSF notices each January.
Worked Examples: How Much Goes to Each Tier
| Monthly pay | Tier I (employee) | Tier II (employee) | Employee total | Employer total |
|---|---|---|---|---|
| KSh 8,000 | KSh 480 | KSh 0 | KSh 480 | KSh 480 |
| KSh 15,000 | KSh 540 | KSh 360 | KSh 900 | KSh 900 |
| KSh 30,000 | KSh 540 | KSh 1,260 | KSh 1,800 | KSh 1,800 |
| KSh 50,000 | KSh 540 | KSh 2,460 | KSh 3,000 | KSh 3,000 |
| KSh 100,000 | KSh 540 | KSh 5,460 | KSh 6,000 | KSh 6,000 |
| KSh 150,000 | KSh 540 | KSh 5,940 | KSh 6,480 | KSh 6,480 |
For pay between the two limits, the total simply equals 6% of the whole salary. Above KSh 108,000 the deduction stops growing. To run your own figure, use our NSSF calculator, and to see how NSSF changes your net pay after tax, the SHIF and the housing levy, use the PAYE calculator.
Contracting Out: When Tier II Goes Somewhere Else
An employer that runs a registered occupational pension scheme, or uses an approved umbrella or individual scheme, can apply to send Tier II contributions there instead of to NSSF. The application goes to the Retirement Benefits Authority in writing, with the prescribed forms, at least 60 days before the date it wants to start. Tier I can never be contracted out.
What contracting out changes for you:
- The amount stays the same. You still pay 6% of the Tier II band, matched by the employer.
- Your statement splits. Tier I shows on your NSSF statement, while Tier II appears on the scheme’s member statement.
- Returns and fees differ. The private scheme declares its own returns and charges its own fees, so compare its annual report with NSSF’s.
- Withdrawal rules follow the scheme. Our guide to pension withdrawal rules explains what you can take when you change jobs.
How to Tell Which Applies to You
Look at your payslip. If it shows a single NSSF line of up to KSh 6,480, both tiers are probably going to NSSF. If it shows “NSSF Tier I” of up to KSh 540 and a separate pension or “Tier II” line paid to a named scheme, your employer has contracted out. If you are unsure, ask HR for the RBA approval letter.
Checking That Both Tiers Are Being Paid
Employers must remit both shares by the 9th of the following month, and NSSF charges a penalty of 5% of the unpaid amount for each month it is late. Download your NSSF statement every few months and compare it with your payslips. Missing Tier II months are the most common gap after a salary increase pushes pay above KSh 9,000. When you retire or leave formal work, see how to claim NSSF benefits, and to project what Tier I, Tier II and any workplace pension could be worth at 60, try our retirement calculator. The full rate history and the NSSF calculator are also in our NSSF contribution rates guide.
If you are job hunting and want to compare payslips, browse openings on JobinKenya.
Frequently Asked Questions
What is the difference between NSSF Tier I and Tier II?
Tier I is 6% of the first KSh 9,000 of pay and always goes to NSSF. Tier II is 6% of pay from KSh 9,000 to KSh 108,000 and can go to an approved private scheme if the employer contracts out.
How much is NSSF Tier I in 2026?
KSh 540 a month from the employee and KSh 540 from the employer, for anyone earning KSh 9,000 or more.
How much is NSSF Tier II in 2026?
Up to KSh 5,940 a month from the employee, matched by the employer, for pay of KSh 108,000 or more.
Can I opt out of NSSF completely?
No. Tier I is compulsory for everyone in formal employment. Only Tier II can be redirected, and that decision is made by the employer with RBA approval.
Do I pay Tier II if I earn KSh 9,000 or less?
No. If your pay is at or below the lower earnings limit, only Tier I applies.
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