Retirement Authority moves to recover Ksh65B unremitted pension funds

The Retirement Benefits Authority (RBA) is working to recover Ksh65 billion in unremitted pension contributions owed to various retirement benefit schemes. These contributions typically include both the principal amount and accrued interest, owed by employers who deducted pension contributions from employees but failed to remit the funds to the appropriate schemes.

At a recent conference, RBA representative John Karia announced that the Authority would be reviewing the Retirement Benefits Act to strengthen enforcement measures and increase collaboration with the Kenya Revenue Authority (KRA) to recover the outstanding funds. Karia acknowledged that a significant portion of the unremitted contributions originated from public sector employers who were facing financial difficulties.

He proposed that statutory deductions be made directly from the National Treasury to pension schemes and other statutory organizations, with the aim of improving the efficiency of remittances and minimizing delays in transferring workers' contributions to the relevant schemes. The RBA is also implementing new legal provisions to enhance compliance and ensure that employers fulfill their remittance obligations.

Despite overall growth in the sector, with assets under management reaching Sh3.1 trillion as of June 30, 2026, and approximately 4.1 million active members, pension coverage remains at only 26 percent of the workforce. This is largely due to the informal sector, where most workers are not adequately covered. Karia emphasized that existing pension products were primarily designed for formally employed workers, leaving informal sector workers with limited access to retirement savings options.

The Association of Retirement Benefits Schemes (ARBS) Chairperson, Jane Nzau, stressed the importance of public education and financial literacy to encourage more Kenyans to plan for their retirement. She pointed out that many people overlook the significance of starting to save early due to a common misconception that retirement savings are only relevant in old age.

ARBS Vice Chairperson Daniel Mainga discussed the introduction of regulations governing post-retirement medical funds, aimed at encouraging members to save specifically for healthcare expenses after leaving employment. The government offers tax incentives for contributions to post-retirement medical funds, with a combined monthly allowance of up to Sh45,000 for savings aimed at both retirement and post-retirement medical needs.

Mainga emphasized the importance of early savings and encouraged workers to allocate part of their pension savings to medical funds to mitigate the high cost of healthcare in retirement.