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The Tax Amendment Bill of 2024 introduced several amendments to the pension industry, including one that encourages Kenyans to save up to Sh30,000 a month tax-free.
The Retirement Benefits Authority (RBA) has revived its push to limit early access to pension benefits before retirement as an intervention to preserve the bulk of savings for later years.
The regulator was forced to forfeit a plan to freeze early access to pensions earlier this year after workers, especially the youth, rejected the proposal during public hearings.
RBA wants workers to be allowed to only access up to 30 per cent of their accrued benefits before attaining age 50.
A worker at present can access their individual contributions towards retirement before age 50 in addition to half of their employer’s contribution, putting the effective access limit at 75 percent.
“There is a proposal that early access of retirement benefits before retirement be progressively limited to 30 per cent of accrued benefits,” RBA chief executive officer Charles Machira said in a presentation to stakeholders on Thursday.
“One of our resolutions last year was to develop strategies to discourage early benefit withdrawals before retirement age.”
Retirement Benefits Authority CEO Charles Machira.
The proposal has been anchored on findings of inadequate pension savings including data that shows over 80 per cent of senior citizens at work.
Prior data from the Kenya National Bureau of Statistics (KNBS) shows that 708,902 of 869,338 persons above the age of 60 are in active employment, representing 81.5 per cent of the senior citizens in the country.
The data points to a possible deepening of old age poverty which has significant social implications in a country where the traditional patterns of the young taking care of the old have changed.
Kenya also suffers from low pension coverage, with more than 70 per cent of workers retiring without a pension outside of payouts from the National Social Security Fund (NSSF).
The plan to put curbs on early pension access ran into opposition during public participation.
Young workers objected to the proposal moved in April this year while the old were in support of the blockade.
RBA indicated that young workers are more concerned with immediate financial needs including trying to buy a house.
The surge in layoffs witnessed during the Covid pandemic that began in 2020 triggered a rise in pension contributors accessing part of their retirement savings before reaching the age of 50 which is the legally set early retirement age.
Following the youth-led opposition against blocking early pension access in totality, the retirement benefits sector regulator indicated it would reach a compromise to allow Kenyans to partly tap their contributions for pressing needs including school fees, medical bills and mortgage payments.
“We are also deliberate that we should create avenues that if you need school fees, medical or a mortgage payment, then we must find ways to ensure people can access their money,” Mr. Machira said previously.
The vast majority have not withdrawn their pension savings while still working according to a retirement readiness survey by ICEA Group published last week, which puts the rate of early access at 10 percent.
Emergency spending needs have been the biggest reason for accessing retirement savings early even as some contributors tap the funds to invest, buy property or finance a home improvement.
“The primary reason for withdrawing retirement savings is an emergency, accounting for 61 percent of the responses. Other reasons such as investing, buying property and financing home improvements are significantly less common,” the survey said.
RBA is still expected to present the revised proposal to limit early pensions access for public participation.
Total pension assets rose to Sh2.53 trillion in June 2025 from Sh1.97 trillion at the same time last year.
The assets of NSSF rose to Sh558 billion from Sh476 billion a year earlier as it benefited from higher contributions in February this year as the NSSF Act, 2013 moved to its third year of implementation resulting in an uptick in deductions from salaried workers.
RBA placed the rate of the working age population with access to pension at 26.5 percent with total active membership in schemes at 4.38 million.
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