Tax Update
NSSF Tiers Explained
How the two-tier NSSF contribution works, the upper and lower limits, and the impact on take-home pay.
NSSF contributions are split into two tiers based on pensionable pay thresholds. Understanding where an employee's salary falls determines how much is deducted — and matched by the employer.
Key insights
- Tier I covers pensionable pay up to the lower earnings limit; Tier II covers pay between the lower and upper limits.
- Both tiers are matched equally by the employer, doubling the total contribution per employee.
- Earnings above the upper limit are not subject to further NSSF deduction.
Illustrative computation
- 1
Compare pensionable pay against the Tier I lower limit.
- 2
Apply the Tier I rate to the portion of pay up to that limit.
- 3
Apply the Tier II rate to the portion of pay between the lower and upper limits.
- 4
Sum both tiers for the employee deduction, then match it for the employer contribution.
Compliance tips
- Review NSSF limits annually — they are adjusted periodically and payroll software needs manual confirmation.
- Reconcile NSSF remittance schedules against your payroll register every month before submission.
Need help with this in your business?
Talk to us about payroll and we'll scope what it takes for your situation.
Related articles
All resourcesUnderstanding PAYE in Kenya
A practical walkthrough of how PAYE is computed, including the personal relief and recent statutory deductions that affect net pay.
6 min · 2026How the Housing Levy Affects Your Payroll
What the Affordable Housing Levy means for employers and employees, and how to compute it correctly on each payslip.
5 min · 2026VAT Basics for Kenyan Businesses
Who should register for VAT, how it works, and common mistakes to avoid.
6 min · 2026