Kenyans’ pension contributions have almost doubled since 2022

Kenyans’ contributions towards pension schemes have nearly doubled since 2022, data from the Retirement Benefits Authority (RBA) shows.

RBA records show pension contributions over the last three years have risen from Ksh.62.73 billion for the half year ending June 2022 to Ksh.118.80 billion for the half ending December 2024.

For the six months ending in December 2022, pension contributions were Ksh.70.26 billion, then climbed to Ksh.83.14 billion in the half-year up to June 2023 and further to Ksh.105.65 in the second half of 2023.

Last year, Kenyans contributed Ksh.116.10 billion in the first year-half, before taking it up to Ksh.118.80 billion in the second half.

At the same time, contributions to Post-Retirement Medical Funds (PRMFs), which allow one to save for their healthcare after retiring, have risen sharply since September 2024.

In the six months ending December 2023, RBA data shows Kenyans contributed Ksh.51.51 million towards their PRMFs, which went up in the first half of last year to Ksh.76.02 million.

In the second half of 2024, the figure shot more than thrice to Ksh.268.36 million, mainly due to the Treasury directive allowing pension schemes and employers to set medical funds for members or employees per post-retirement medical fund rules.

Recent amendments to the National Social Security Fund (NSSF) Act, 2013, have seen the introduction of increased contribution rates to the state-owned pension scheme and the expansion of the contribution base to include workers in the informal sector.

Last year, NSSF adopted a tiered contribution system to replace the previous flat-rate contributions.

Tier I contributions are for pensionable earnings up to the lower earnings limit (Ksh.7,000 monthly), while Tier II contributions apply to earnings over that.

While Tier I contributions are paid directly to the NSSF, employers were given the option of directing Tier II contributions to a contracted-out or set-up scheme.

Employees part with six per cent of their monthly gross pay to the fund, which is matched by their employers.

In 2024, the maximum deduction was Ksh.2,160 from the employee and an equal amount from the employer, totalling Ksh.4,320.

But from February 2025, the employee’s maximum deduction was raised to Ksh.4,320, plus a matching employer contribution, totalling Ksh.8,640.