Kenyans may soon have greater flexibility in accessing their pension savings before reaching retirement age, following proposed reforms to the country’s retirement benefits framework. The changes, being advanced by the Retirement Benefits Authority (RBA), seek to balance immediate household needs with the long-term objective of preserving adequate income in old age.
Under the current system, early access to pension benefits is limited. Members of occupational pension schemes can withdraw up to 50 percent of their accumulated savings when changing jobs. Full access before the age of 50 is generally restricted to exceptional circumstances such as permanent migration or serious ill health. Any other early withdrawal typically attracts tax penalties aligned with personal income tax rates.
The RBA is now proposing a shift toward a “two-pot” pension system, a reform already embedded in Kenya’s national retirement policy. The model would split future pension contributions into two components. One portion would be preserved strictly for retirement, while the other would be placed in a separate sub-account that members could access during their working life. This accessible portion would offer limited liquidity to address financial pressures without eroding the bulk of retirement savings.
While the regulator has not prescribed specific uses for the accessible savings, it has indicated that pension schemes would be allowed to define permissible purposes, subject to oversight. Likely uses include housing-related expenses, education costs, medical bills, and other essential household needs. This flexibility is expected to make pension schemes more attractive, particularly to younger workers who often prioritise short- to medium-term financial goals.
The proposal is partly informed by international experience, notably South Africa’s adoption of a similar two-pot framework. That system allows members to withdraw a portion of their retirement savings without resigning from employment, reducing the need for drastic financial decisions during periods of hardship.
Importantly, savings accumulated before the adoption of the new framework would remain subject to existing rules. To safeguard retirement outcomes, the RBA is considering limits that would cap early access to a fraction of contributions made under the new system, potentially restricting withdrawals to no more than 30 percent of eligible savings.
The regulator’s evolving stance reflects broader social and economic realities. Many workers face income disruptions long before retirement, yet hold substantial funds locked away in pension accounts. At the same time, Kenya continues to grapple with low pension coverage and rising old-age vulnerability, making preservation of retirement savings a critical policy priority.
The reforms could also extend to the National Social Security Fund, which currently restricts access until retirement age. Aligning its rules with occupational schemes would standardize pension access across the sector.
As the proposals move toward possible inclusion in the Finance Bill of 2026, public participation will play a key role in shaping how flexibility and protection are balanced. For individuals, the discussion highlights the importance of complementing long-term pension planning with short-term savings solutions that offer liquidity without compromising future security.
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