About 13.9 million Kenyans have no form of retirement savings scheme, and the majority of them are in the informal sector.

According to data from the Kenya National Bureau of Statistics (KNBS), there were about 17.4 million people in the formal and informal sectors as of the year 2020.“The labour market is skewed towards informal employment at 83 per cent. This is a time bomb and indicating that most Kenyans will retire poor,” the report notes.

The report was presented during the ongoing Minet Annual Pension Conference being held at a Naivasha hotel.

Addressing participants, Retirement Benefit Authority (RBA) official Jackson Nguthu said that the current number of individuals actively contributing towards a retirement benefits programme was approximately 3.5 million, which is just 25 per cent of the labour force.“Out of this number, approximately 800,000 contribute to both the National Social Security Fund (NSSF) and the private occupational and individual schemes, with 2.7 million contributing only to NSSF,” he observed.

Low contribution rates

The data presented showed low contribution rates, such as the KSh400 ($3.21)channelled to the NSSF, short contribution periods, and early withdrawals from schemes.

On September 14, 2020, the Retirement Benefits (Mortgage Loans) Amendment Regulations came into force following an amendment to Section 38(1A) of the Act.

Mr Nguthu revealed that through the amendment, it became possible for members to withdraw up to 40 per cent of their accrued benefits, which is up to a maximum of KSh7 million ($56,000) for the purpose of purchasing a residential house.“We saw an increased appetite from members to take advantage of this opportunity to acquire homes. However, on November 23, 2022, the High Court of Kenya issued a judgment quashing the amendment as well as the regulations. The main reason for the nullification was that the amendment was not subjected to public participation,” he noted.

On December 20 2022, in compliance with the court ruling, the agency issued a notice to the retirement benefits sector to halt any further disbursements to members.“Further, we advised Trustees that it would not be possible to honour obligations which were entered into pursuant to the nullified law, including professional undertakings, as this would contravene the court’s orders,” the participants were told.

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