Most Kenyans retire with far less than they need. Saving early, and using the tax relief the law allows, makes a large difference. This is general information, not financial advice.

The three layers

  1. NSSF - the national scheme. Employees pay 6% of pensionable pay, matched by the employer, up to the upper earnings limit. See NSSF statement and benefits.
  2. Occupational schemes - pension or provident funds run by an employer, usually with the employer contributing too.
  3. Personal pension plans - individual plans from insurers and fund managers, open to anyone, including the self-employed.

All are regulated by the Retirement Benefits Authority (RBA), which publishes the list of registered schemes.

Tax relief

Contributions to a registered scheme are deducted from taxable income, up to the lowest of:

  • KES 30,000 a month (KES 360,000 a year),
  • 30% of pensionable pay, or
  • what you actually paid in.

NSSF contributions count towards the same limit. Contributions to a registered post-retirement medical fund get their own deduction of up to KES 15,000 a month.

For someone paying tax at 30%, every KES 10,000 put into a pension saves about KES 3,000 in tax. Employers usually apply the relief through payroll; if you pay into a personal plan yourself, claim it on your annual return.

Choosing a personal plan

  • Registered with RBA?
  • Fees - management and administration charges eat into returns over decades.
  • Where the money is invested, and past returns.
  • Flexibility - can you vary contributions or pause them?
  • Access before retirement - most plans lock money in, with limited exceptions.

Retiring and leaving

  • Retirement age in most schemes is between 50 (early) and 60 or 65.
  • At retirement, part of the benefit can usually be taken as a lump sum, with the rest paid as a pension or income drawdown. Part of the lump sum is tax-free, within limits.
  • Leaving a job before retirement: your benefits can usually be moved to a new scheme or a preservation fund. Taking cash early means losing tax benefits and your retirement savings.

For expatriates

Foreign employees contribute to NSSF and may join employer schemes. Ask what happens to benefits when you leave Kenya - NSSF has an emigration benefit.

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