Kenya's pension industry has seen steady growth, with assets under management reaching Kes 3.2 trillion as of June 2026. However, despite this growth, the industry still faces a significant challenge in terms of coverage. According to official data, only 3 out of every 10 working-age Kenyans are in a formal pension scheme, highlighting the need for increased inclusion. This low coverage is particularly concerning given the importance of pension schemes in providing financial security for individuals in retirement.
The low coverage is largely attributed to the vast informal segment of the labor market, which makes it difficult for pension schemes to reach these workers. To address this issue, pension and retirement preparation solutions need to be made more accessible and affordable for informal sector workers. Sanlam Allianz Ke has recently released its inaugural Retirement Benchmark Report for the Kenyan market, which highlights the strides made in widening the distribution of pension and retirement preparation solutions.
Jacqueline Karasha, a pension expert, notes that there is still a significant gap in terms of coverage, particularly in the informal sector. To bridge this gap, innovative solutions such as mobile-based pension schemes and informal sector-specific pension products are being explored. Additionally, the industry is also looking at ways to increase financial literacy and awareness about the importance of pension schemes.
The pension industry's growth has also been driven by the increasing awareness of the need for retirement planning. Many Kenyans are now taking proactive steps to plan for their retirement, driving demand for pension schemes and other retirement planning solutions. However, more needs to be done to increase coverage and ensure that all working-age Kenyans have access to a formal pension scheme.
The Central Bank of Kenya has been working to enhance the regulatory framework for the pension industry, which has helped to increase confidence in the sector. The bank has also been promoting financial inclusion, which has led to an increase in the number of people accessing financial services, including pension schemes.
Standard Chartered Kenya's Chief Executive, Birju Sanghrajka, notes that the bank's reclassification to the medium category by the Central Bank of Kenya reflects its commitment to serving the Kenyan market. The bank's parent firm has also announced plans to exit some of its African markets, but Sanghrajka emphasizes that this will not affect its operations in Kenya.
As the pension industry continues to grow, it is essential that stakeholders work together to address the challenges facing the sector. This includes increasing coverage, improving financial literacy, and developing innovative solutions to meet the needs of informal sector workers. By working together, it is possible to ensure that all working-age Kenyans have access to a formal pension scheme and can enjoy financial security in retirement.
Key points
- Only 3 out of 10 working-age Kenyans are in a formal pension scheme.
