Nairobi:The Retirement Benefits Authority (RBA) is taking action to recover Sh65 billion in unremitted pension contributions owed to retirement benefits schemes. This initiative aims to protect workers’ savings and enhance accountability within the sector.
According to Kenya News Agency, the outstanding funds consist of principal contributions and accrued interest, which employers deducted from employees but did not remit to their respective schemes. During the fourth annual Association of Retirement Benefits Schemes (ARBS) conference at Lake Naivasha Resort, RBA representative John Karia announced that the Authority is reviewing the Retirement Benefits Act to bolster enforcement and collaborate with the Kenya Revenue Authority (KRA) to recover these funds.
Karia highlighted that a significant portion of the unremitted contributions involves public sector employers facing financial difficulties. Discussions are ongoing with government agencies to address this issue. One potential solution under consideration is redirecting statutory deductions directly from the National Treasury to pension schemes, bypassing individual government entities, to improve remittance efficiency and reduce delays.
The challenge of unremitted contributions remains a persistent issue in the sector. The RBA is working on new legal provisions to enhance compliance and ensure employers meet their remittance obligations. Meanwhile, the retirement benefits sector in Kenya has grown significantly, with assets under management reaching Sh3.1 trillion as of June 30, 2026.
Despite this growth, pension coverage remains low at 26% of the workforce, with many uncovered workers from the informal sector. Karia noted that existing pension products are mainly designed for formally employed workers, limiting access for those in the informal economy. The RBA is collaborating with industry stakeholders to develop flexible and affordable products for informal sector workers.
ARBS Chairperson Jane Nzau emphasized the need for public education and financial literacy to encourage retirement planning. Nzau observed that many people associate retirement savings with old age, missing the importance of early planning for financial security. The association is engaging with regulators and stakeholders to promote pension products that cater to informal sector workers.
The conference also addressed the importance of post-retirement medical funds, with industry players identifying healthcare expenses as a major challenge for retirees. ARBS Vice Chairperson Daniel Mainga explained that regulations have been introduced to encourage savings specifically for healthcare needs post-employment. Tax incentives of up to Sh15,000 monthly for contributions to these funds are available, alongside an increased tax-allowable limit for pension contributions, providing a combined monthly tax-allowable contribution of up to Sh45,000.
Mainga urged workers to start saving early and consider allocating part of their pension savings to medical funds to mitigate healthcare costs in retirement. Post-retirement medical funds offer retirees access to medical cover through group arrangements, addressing high premiums and challenges of individual medical insurance at an advanced age. The conference, themed “Stewardship for Sustainable Retirement Outcomes,” gathered pension industry stakeholders to discuss improving retirement security and focusing on members’ welfare in pension scheme management.
