Kenyans Urged to Start Early Retirement Savings Amid Low Pension Penetration
Retirement planning must start early and remain consistent, pension sector players have said, as Kenya continues to grapple with a low retirement savings rate—particularly among informal sector workers.
Kenya’s pension penetration rate currently stands at an estimated 26 percent, one of the lowest in sub-Saharan Africa. This leaves a vast segment of the population, especially those in informal employment, without access to a reliable financial cushion in old age.
According to the Retirement Benefits Authority (RBA), total pension Assets Under Management (AUM) reached Sh2.25 trillion by December 2024, marking a substantial Sh276.5 billion increase—about 14 percent growth—since June 2024. This growth has been attributed to strong investment income and increased contributions, partly driven by the implementation of the National Social Security Fund (NSSF) Act of 2013.
Octagon Africa Group CEO Fred Waswa emphasized the urgency of beginning retirement savings early, highlighting the power of compound interest. “The earlier individuals begin saving, the greater the benefits they enjoy,” Waswa said during Octagon Africa’s 18th anniversary celebration.
He pointed out that many Kenyans in the informal sector—such as Jua Kali artisans, SMEs, boda boda riders, and farmers—have long been excluded from structured retirement plans. However, Waswa noted that this is beginning to change through private sector innovation and digital solutions.
“Inclusivity and accessibility are non-negotiable. A dignified retirement should not be a privilege reserved for employees of large corporations. Our solutions are designed for all, powered by mobile access, simplified onboarding, and tailored support,” he said.
While legal frameworks like the NSSF Act and RBA regulations provide a policy foundation, Waswa argued that real impact will come from integrating pension services into everyday financial tools and encouraging early savings habits.
The recent adjustment to contribution limits under the NSSF Act has seen the lower limit increase from Sh6,000 to Sh7,000, while the upper limit doubled from Sh18,000 to Sh36,000. This has significantly boosted overall contributions.
Pension sector players now urge more Kenyans, especially in the informal sector, to take advantage of such reforms and start planning for retirement early, to ensure a secure and dignified future.
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Kenyans Urged to Start Early Retirement Savings Amid Low Pension Penetration