The National Social Security Fund (NSSF) is a Kenyan government agency whose main objective is to offer social protection to all Kenyan workers in the formal and informal sectors. The NSSF functions as both a pension and a provident fund, offering long-term retirement benefits and savings in certain circumstances.
NSSF was established in 1965 and currently operates under the 2013 Act. The act provides a framework for employers to register for NSSF and make contributions on behalf of their employees. Failure to do so on time can lead to substantial penalties and legal consequences.
Starting February 2025, the National Social Security Fund implemented the third phase of its contribution increases, raising the lower contribution limit from KSh 7,000 to KSh 8,000 and dramatically expanding the upper limit from KSh 36,000 to KSh 72,000. These changes represent the most significant adjustment yet in the gradual five-year implementation of enhanced NSSF contributions mandated by the NSSF Act of 2013.
What is Tier 1 and Tier 2 NSSF 2025?
The National Social Security Fund rates continue to operate on a two-tiered system, but with substantially expanded contribution ranges that affect many more Kenyan workers than in previous years. The amount of NSSF contributions you make is determined by the salary tier in which you fall, with both tiers now covering a much wider range of income levels.
NSSF has two tiers categorized as Tier 1 and Tier 2 Contributions as follows:
Tier 1 Contributions
Tier 1 now applies to the first KSh 8,000 of your monthly earnings, increased from the previous KSh 7,000. Both you and your employer contribute 6% of this amount, for a total contribution of 12%. This means the minimum monthly contribution has increased from KSh 420 to KSh 480 per person.
For example, if you earn KSh 10,000 per month, the Tier 1 contribution will be calculated on KSh 8,000, meaning you’ll pay KSh 480 while your employer also contributes KSh 480, totaling KSh 960 monthly.
Tier 2 Contributions
Tier 2 now applies to earnings between KSh 8,000 and KSh 72,000, representing a massive expansion from the previous range of KSh 7,000 to KSh 36,000. Both you and your employer continue to contribute 6% each on this portion of your salary.
This expansion means that employees earning up to KSh 72,000 monthly now contribute on their full salary, whereas previously, those earning above KSh 36,000 had a contribution ceiling that limited their retirement savings accumulation.
What is the maximum contribution to the NSSF?
To understand the maximum contribution scenario, consider someone earning KSh 72,000 or more per month:
- Tier 1 Calculation: You and your employer each contribute KSh 480 (6% of KSh 8,000).
- Tier 2 Calculation: You and your employer each contribute KSh 3,840 (6% of KSh 64,000, which is KSh 72,000 minus KSh 8,000)
Therefore, the total Monthly Contribution is KSh 8,640, with you contributing KSh 4,320 and your employer matching that exact amount.
How the New Rates Affect Different Salaries
The February 2025 NSSF rate adjustments create varying impacts across different income levels, with the most significant changes affecting middle and higher-income earners. Understanding these impacts helps you plan your finances more effectively and appreciate the long-term benefits of increased retirement savings.
For employees earning up to KSh 8,000 monthly, the changes are relatively modest. Your contribution increases from KSh 420 to KSh 480 monthly, representing an additional KSh 60 in deductions. However, this also means KSh 60 more in employer matching, resulting in KSh 120 additional monthly retirement savings.
The most substantial impact affects employees earning above the previous KSh 36,000 ceiling, who now contribute on a much larger portion of their salary. This represents a fundamental shift in how higher earners build their retirement funds through NSSF.
The following table illustrates how the new rates affect different salary levels, showing both your personal contribution and the total retirement savings (including employer matching):
| Monthly Salary (KES) | Your Contribution (KES) | Total Savings (KES) | Monthly Increase |
|---|---|---|---|
| 10,000 | 600 | 1,200 | +120 |
| 20,000 | 1,200 | 2,400 | +240 |
| 30,000 | 1,800 | 3,600 | +1,440 |
| 40,000 | 2,400 | 4,800 | +2,880 |
| 50,000 | 3,000 | 6,000 | +3,600 |
| 72,000 | 4,320 | 8,640 | +5,760 |
| 100,000 | 4,320 | 8,640 | +5,760 |
Note
The Total Savings column represents your contribution plus your employer’s matching contribution, showing the monthly amount added to your NSSF account.
