Kenyans’ investments in pension schemes have nearly doubled since 2022, according to data from the Retirement Benefits Authority (RBA).
The RBA’s records indicate that pension contributions surged from Ksh.62.73 billion for the first half of 2022 to Ksh.118.80 billion by the end of December 2024.
In the six months leading up to December 2022, contributions amounted to Ksh.70.26 billion, which increased to Ksh.83.14 billion in the first half of 2023, and then rose further to Ksh.105.65 billion in the latter half of 2023.
In the first half of last year, Kenyans contributed Ksh.116.10 billion, which slightly increased to Ksh.118.80 billion in the second half.
Simultaneously, contributions to Post-Retirement Medical Funds (PRMFs), designed for healthcare savings after retirement, have seen a significant rise since September 2024.
For the six months ending December 2023, RBA data reveals that Kenyans contributed Ksh.51.51 million to their PRMFs, which increased to Ksh.76.02 million in the first half of last year.
In the latter half of 2024, this amount skyrocketed to Ksh.268.36 million, largely due to a Treasury directive that permitted pension schemes and employers to establish medical funds for their members or employees in accordance with PRMF regulations.
Recent changes to the National Social Security Fund (NSSF) Act of 2013 have introduced higher contribution rates for the state-run pension scheme and expanded the contribution base to include informal sector workers.
Last year, the NSSF implemented a tiered contribution system, replacing the previous flat-rate model.
Tier I contributions apply to pensionable earnings up to the lower earnings limit of Ksh.7,000 per month, while Tier II contributions are for earnings exceeding that threshold.
While Tier I contributions are directly paid to the NSSF, employers have the option to allocate Tier II contributions to a contracted-out scheme or a newly established one.
Workers contribute six percent of their gross monthly salary to the fund, with their employers matching this amount.
In 2024, the maximum deduction was Ksh.2,160 from the employee, along with an equal contribution from the employer, bringing the total to Ksh.4,320.
Starting in February 2025, the maximum deduction for employees increased to Ksh.4,320, with employers also contributing the same amount, resulting in a total of Ksh.8,640.
