Workers say pension savings won't support them in retirement

The launch of the ICEA LION retirement preparedness index (IRPI) report in Nairobi on November 18, 2025. [David Gichuru,Standard]

Majority of employees say their current pension savings, investments or pension plans will not be enough to support them when they stop working.

According to the ICEA Retirement Preparedness Index released yesterday, 37 per cent of working population said pension savings would not support them, while 35 per cent are not sure.

Only 29 per cent are confident the scheme would be helpful. 

On retirees, 49 per cent said the contribution would be sufficient, 33 per cent said it would not and 19 per cent are not sure.

“It shows that the money that they save for retirement is not adequate. Actually, almost half of them are struggling in terms of just meeting their daily expenditures.

This means that many employed Kenyans are not prepared for retirement,” said Jacqueline Ochieng, head of research and partnerships at ICEA LION.

Ochieng called for the creation of awareness to the current employed population on the need to increase their retirement savings.

“First we need to have the information because at the end of it, what we are trying to do is to maintain our living standards. So just picture yourself, if you are living the life of earning maybe for example, like even Sh15,000, you also want to live that life when you eventually retire."

Most of the pension savings are used on healthcare expenses, school fees for dependents, supporting family or dependents, food or household items, followed by house rent and loan repayments.

The study comprised 1,000 working adults and 300 retirees in the formal and informal sectors in Nairobi, Mombasa, Eldoret, Nakuru, Nyeri, and Kisumu.

Tom Kiptanui, director, market conduct and industry development at the Retirement Benefits Authority, backed the call for increased individual savings.  

“Those in the formal sector, employers have taken care of you by contributing to your pension scheme. But we still want to urge that if you have an opportunity, you can always be able to do additional voluntary contributions so that the replacement rate that you endeavour to get can actually be enhanced.”

“Those in the informal sector, which really takes around 74 percent of our workforce, I want to encourage them that the individual pension plans that we have registered is an opportunity for you to be able to save towards retirement. Please get in touch with these various institutions and they should be able to guide you on how to be able to save towards retirement because we want to carry everybody on board.”

Currently, he said the pension coverage is around 26.5 percent and through their 2024-2029 strategic plan, they plan to increase it by 34 percent to Sh3.2 trillion by 2029.

“Government has gone ahead to be able to give incentives in terms of tax breaks and this is something that we need to let as many people as possible know and be able to take advantage of that," he said.

Currently, employees earning a salary of up to Sh30,000 per month are exempted from taxation.