Majority of Kenyans retire into poverty


Only four percent of the retirement fund members analysed, made voluntary contributions over and above the stipulated levels.

It would appear that Kenya is on the verge of a retirement crisis despite having legislation that has improved the governance and operations of pension funds, according to a new study by the Zamara Group.

The study notes that the legislations has done little to improve the coverage and adequacy of benefits in the country.

While announcing the survey, Zamara Group Chief Executive Officer Sundeep Raichura said that even those who are saving under the retirement schemes, their investments were grossly insufficient to provide an adequate income during sunset years.

Raichura said that the findings were quite significant and worrying in that even the few Kenyans lucky enough to belong to a retirement scheme were sleepwalking to disaster and not even aware of it.


He called for urgent intervention by government, regulators, employers and the pension industry to take stock of the situation and come up with policy reforms and measures that improves the outcomes of members of retirement funds.

“Simply put, we need to see more money into retirement savings, get better value out of those savings and have a collective financial literacy drive” he added.
It also revealed that 93 percent of Kenyans were opting to access the maximum portion of their retirement savings that they can access when changing jobs or leaving employment and this premature encashment of retirement savings was severely impacting the retirement saving journey.

“It’s like going on a long distance journey and emptying the fuel tank at every stop” said Raichura.

The study showed that the level of contributions for 40 percent of the retirement schemes in the sample were below the level required to generate a reasonable retirement benefit and when coupled with the lack of preservation of retirement savings meant Kenyans were wholly unprepared for retirement.

Zamara also analysed the options exercised by members of retirement funds when they retire.

With inflation averaging seven percent per annum, this means that the real value or pensions was halved in ten years.


The study showed that most Kenyans did not appreciate the impact of inflation on their savings and pension incomes. Overall, members of retirement funds appeared to have a limited understanding of their benefit options and the impact of their decisions on their financial security. Members were struggling to identify products that were appropriate to their needs.

Only four percent of the retirement fund members analysed, made voluntary contributions over and above the stipulated levels.

Further the level of engagement of members with their retirement savings was very low principally because of a low level of financial understanding and individuals having more pressing immediate priorities such as housing, education and emergencies that competed head on with saving for retirement.

It was noted that providing members with financial targets and helping them understand whether they are achieving them over time was an important catalyst to getting them to take action to improve their retirement readiness.