Nairobi — An official from the Retirement Benefit Authority (RBA) has revealed that 74% of Kenya’s population does not have a formal saving scheme for retirement. This statistic was highlighted during a public forum addressing proposed policy changes to the Retirement Benefits Act and Regulations.
According to Kenya News Agency, Assistant Director of Research Strategy and Planning at RBA, the authority is advocating for a stronger saving culture among Kenyans to address the significant deficit in retirement planning. Since the RBA’s inception in 1997, only 3.2 million active members have been registered with retirement schemes.
A January report by the Kenya National Bureau of Statistics (KNBS) pointed out that approximately 13.9 million Kenyans are without any retirement savings, with a majority employed within the informal sector. The report warns of a looming crisis, suggesting that a large portion of the population may face poverty in retirement.
In response to this, RBA, with assets totaling Sh 1.7 trillion and oversight of 1,076 registered schemes, proposes regulatory revisions to enable more efficient collection of workers’ savings. Key recommendations include enlisting the Kenya Revenue Authority (KRA) to assist in gathering outstanding contributions.
The proposed legislative changes aim to extend the period for tax-exempt pension benefits from 10 to 20 years, potentially increasing the tax-free limit from Sh 600,000 to account for inflation and enhance retirees’ income. Additionally, adjustments to the Income Tax Act are suggested to raise the tax-exempt threshold for retirement annuities from Sh 300,000 to Sh 456,000, reflecting the current economic climate and inflation trends.
Arwings expressed hope to KNA that these changes would be embraced by the public and further encourage participation in regulated saving schemes. The RBA has been conducting public outreach across various counties, including Machakos, Uasin Gishu, Mombasa, and Nairobi, with plans to engage all 47 counties.
The RBA, operational since 2000, was established by an act of Parliament three years prior, marking the formation of Kenya’s first authoritative body to manage worker retirement benefits.