Your NSSF deduction
Tier I + II, 2026 rates
NSSF Tier II contracting out allows an approved employer arrangement to direct Tier II contributions to a qualifying retirement scheme. It is not permission to stop pension deductions or replace them with an ordinary savings account. Before changing payroll, establish the approval, scheme and effective period.
Use the NSSF calculator to split the contribution. The statutory deductions guide explains how this fits alongside the rest of payroll. This checklist concerns implementing an arrangement, rather than choosing an investment provider.
Separate the two approval questions
The Retirement Benefits Authority notice identifies an employer application using Form C1 and its required attachments. Separately, the receiving scheme must satisfy the Reference Scheme Test and receive the relevant certificate. Evidence that a scheme qualifies does not, by itself, establish that your employer’s arrangement has been approved.
Obtain the current form and regulations from RBA’s NSSF downloads. Have the scheme administrator help assemble the required attachments. Do not rely on a provider’s marketing page as the approval document or assume every existing occupational pension automatically qualifies.
Build a controlled changeover file
- Identify the legal employer, proposed receiving scheme and responsible administrator.
- Retain the submitted application, attachments, correspondence and approval.
- Confirm which employees and contribution periods the arrangement covers.
- Record the agreed remittance details and reporting process using verified channels.
- Assign a payroll reviewer to approve the first split and reconcile both destinations.
These are practical implementation controls, not a substitute for the official application requirements. If the start date or scope is unclear, resolve it with RBA and the administrator before redirecting contributions. Keep a separate list of any earlier months needing correction; changing next month’s destination does not explain a historical gap.
Example: split the amount, not the employee’s entitlement
Under the February 2026 limits, pensionable pay of KES 50,000 gives KES 540 employee Tier I and KES 2,460 employee Tier II. The employer matches each amount. The combined Tier I amount is therefore KES 1,080 and Tier II is KES 4,920, totalling KES 6,000.
Where the approved arrangement applies, reconcile Tier I with NSSF and Tier II with the approved scheme. Do not deduct the employer’s KES 3,000 share from the employee, or add the statutory Tier II amount twice because the scheme has a separate payroll code. Any additional occupational pension contribution needs its own clear description.
The NSSF rates guide covers the bands and other salary examples. Use the period’s limits rather than copying the current ceiling into older payroll.
Explain the change to employees
Give employees the scheme name, how to obtain statements and the first affected month. Show the employee contribution separately from the employer match. Explain which record should show each tier so that a legitimate split is not mistaken for missing money.
After the first remittance, match payroll totals to payment evidence and individual allocations at both destinations. A bulk receipt is only part of that reconciliation. For checking the NSSF side, use the contribution-statement guide; for unresolved differences, follow the missing-contributions checklist.
Sources and review date
Published and reviewed on 1 November 2026. Use the rules and official instructions applicable to the period concerned.