Sharp Daily
No Result
View All Result
Friday, May 23, 2025
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
Sharp Daily
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
No Result
View All Result
Sharp Daily
No Result
View All Result
Home Investments

Demystifying pension schemes in Kenya: A roadmap to financial security

Christine Akinyi by Christine Akinyi
January 24, 2025
in Investments, Money
Reading Time: 2 mins read

Pension schemes are the backbone of retirement planning, providing a structured way to save for the future. In Kenya, they are classified into three categories: Occupational Pension Schemes, Individual Pension Plans (IPPs), and Public Pension Schemes. Occupational Pension Schemes are employer-sponsored plans where both employees and employers contribute. These schemes are common in the formal sector, offering a significant advantage as employer contributions effectively double the growth potential of savings.

Individual Pension Plans (IPPs), on the other hand, cater to the self-employed and informal sector workers. These plans provide flexibility in contributions, allowing individuals to save at their convenience. With more than 80.0% of Kenyans working in the informal sector, IPPs offer a practical solution for many who would otherwise be excluded from retirement saving. Financial institutions have stepped up with affordable and accessible IPP options, such as Cytonn’s long-term saving products.

The National Social Security Fund (NSSF) is Kenya’s public pension scheme, mandatory for all workers. Recent reforms have transformed the NSSF, introducing tiered contributions based on income, with a maximum monthly contribution of KES 2,160. This change aims to provide workers with a higher retirement income compared to the previous flat rate of KES 200, which was insufficient to support retirees adequately.

Despite the benefits, pension schemes in Kenya face significant challenges. Low coverage remains a critical issue, with only 20.0% of the workforce enrolled in a pension scheme. Informal sector workers, who make up the majority of Kenya’s labor force, are particularly vulnerable to retiring without adequate savings. Short-term withdrawals further weaken the system, as many individuals cash out their pensions when changing jobs, prioritizing immediate needs over long-term security. Governance issues, including delayed remittances and mismanagement, have also eroded trust in some schemes.  However, there are reasons for optimism. The pension industry in Kenya has grown significantly, with assets under management reaching Ksh 1.7 trillion by 2023. Digital platforms have simplified the process of registration and contributions, expanding access to unbanked populations.

RELATEDPOSTS

Retirement planning for non-salaried workers with CPRBS

May 14, 2025
Economic recession and recovery concept and return on investment roi idea

How umbrella pension schemes work in Kenya

February 21, 2025

Joining a pension scheme is essential for anyone looking to secure financial freedom in retirement. Beyond tax relief and employer contributions, pensions provide peace of mind and dignity in later years. Whether through an occupational scheme, an IPP, or the NSSF, taking action today ensures a stable and worry-free tomorrow. The earlier you begin, the better positioned you are to benefit from compounding and a brighter future.

Previous Post

Understanding the use of SPVs in finance and investments

Next Post

Why banks may prefer issuing loans for green buildings over brown buildings

Christine Akinyi

Christine Akinyi

Related Posts

Investments

SACCO’s at the heart of rural financial inclusion in Kenya

May 22, 2025
Investments

Real yields vs. nominal yields on Kenya’s government bonds

May 21, 2025
Investments

Knight Frank: Kenya’s wealthy swap mansions for market moves

May 19, 2025
Investments

All you need to know about the Cytonn Money Market Fund

May 16, 2025
Investments

May Momentum: Planting seeds for financial growth with CMMF

May 15, 2025
Investments

Structuring private equity deals in Kenya

May 13, 2025

LATEST STORIES

Concerns grow over Kenya’s duty-free trade deal with the U.S.

May 22, 2025

Lessons from Equity Bank’s M-Pesa scandal

May 22, 2025

SACCO’s at the heart of rural financial inclusion in Kenya

May 22, 2025

Kenya’s insurance sector in 2025

May 22, 2025

Your Front Row Seat to the Great Wildebeest Migration

May 22, 2025

Senator Gloria Orwoba’s seat declared vacant

May 21, 2025

Real yields vs. nominal yields on Kenya’s government bonds

May 21, 2025

Boost employee retention and save on costs with CURBS

May 21, 2025
  • About Us
  • Meet The Team
  • Careers
  • Privacy Policy
  • Terms and Conditions
Email us: editor@thesharpdaily.com

Sharp Daily © 2024

No Result
View All Result
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team

Sharp Daily © 2024