The retirement benefits sector is a vital cornerstone of Kenya’s economic development, responsible for mobilizing the long-term savings that secure the future of millions. According to the 2024 FinAccess Household Survey, the sector is robust, with 1,027 registered schemes managing approximately KSh. 2.23 trillion in assets as of December 2024—equivalent to about 13% of the country’s GDP.
The Retirement Benefits Authority has set an ambitious five-year plan to grow these pension assets to KSh. 3.2 trillion and increase pension coverage to 34% by 2029. However, the survey reveals both significant progress and urgent gaps that must be addressed to achieve these goals, particularly regarding inclusion and benefit adequacy.
1. Progress Driven by Legislative Action
A key success highlighted by the 2024 FinAccess Survey is the notable improvement in overall pension access, which grew from 15.2% in 2021 to 20.4% in 2024.
This growth is primarily credited to the implementation of the NSSF Act, 2023. Active membership in the National Social Security Fund (NSSF) surged from 2.6 million to 3.3 million members. Consequently, access to NSSF products grew significantly to 19.8% (up from 14.0% in 2021).
Despite this gain, the uptake of other options remains marginal: occupational schemes stand at 1.9% access, and individual retirement schemes at just 0.5%. Additionally, the uptake of newer, crucial products like Post-Retirement Medical Funds (PRMFs) remains very low at 1.0%.
2. Deep-Rooted Disparities in Access
While overall coverage is expanding, severe disparities persist across Kenya:
- Demographics: Urban, male, wealthier, and middle-aged individuals are significantly more likely to have pension access.
- Geography: Access levels closely track income and formal employment opportunities. Nairobi (38.8%), Kiambu (33.3%), Taita Taveta, Bomet, and Kajiado lead the country. In stark contrast, counties like Mandera (1.5%) and Wajir report the lowest coverage, reflecting the lack of formal employment opportunities.
- Persons with Disabilities (PWDs): This group remains significantly excluded, with only 14.5% having access to any pension product, underscoring the need for deliberate inclusion strategies.
3. The Major Barriers: Employment and Information
For the majority of Kenyans, the barriers to pension saving are fundamentally rooted in the labor market and a persistent information gap. The most substantial obstacle cited by a large margin is the lack of formal employment, impacting a massive 72.8% of respondents and underscoring the necessity of addressing job creation to widen pension access.
The second major hindrance is a lack of information, identified by 31.2% of respondents, with this challenge being particularly severe in rural areas.
Compounding these issues are several other obstacles, including limited documentation, widespread mistrust of pension providers, and the perceived irrelevance of traditional pension models, especially among workers in the informal sector whose income flows are flexible and unpredictable.
These findings collectively suggest that bridging the gap requires not only economic growth but also better communication strategies and more flexible, low-threshold products tailored to underserved populations.
Furthermore, despite formal registration and payroll systems, only 1.4% of registered businesses contribute pensions on behalf of their employees, suggesting gaps in compliance enforcement and product suitability for fluid, informal income flows. Pension saving remains a low national priority, identified as the main savings goal by only 1.7% of financially included adults.
4. The Adequacy Crisis: Saving Enough for Retirement
Even for those who successfully save, the amount saved is often insufficient to guarantee financial dignity in retirement.
- Low Confidence: Only 38.9% of active contributors believe they are saving enough for retirement.
- Income Shortfall: Just 32.2% of pensioners state their retirement income meets their daily needs. This crisis is more acute in urban centers where the cost of living is higher.
Retirees are highly vulnerable to shocks, with health expenses and caregiving burdens dominating spending. While pensions are the main livelihood for 58.7% of pensioners and act as a stabilizing income source, their inadequacy often forces retirees to rely on informal coping mechanisms for daily needs.
5. The Path Forward: Recommendations for a Resilient System
The 2024 FinAccess Survey provides a clear roadmap for strengthening the sector. The final recommendations focus on three critical areas:
- Inclusion and Tailored Products: Expand access through targeted financial literacy campaigns and the development of responsive, low-threshold products specifically designed for informal sector workers.
- Enforcement and Preservation: Rigorously enforce compliance with the NSSF Act among registered businesses and adopt stronger preservation policies to prevent early withdrawals, thereby enhancing retirement adequacy.
- Consumer Protection: Strengthen consumer protection and grievance redress mechanisms, as evidence shows issues like delayed payments and a low rate of formal complaint filing (only 43.5% of those with grievances filed them).
By addressing these regulatory and market challenges, Kenya can ensure its pension system truly aligns with the national goals of social protection and dignified retirement for all workers.
See full report here
