The National Social Security Fund (NSSF) is seeking legislative changes that would allow members to withdraw a portion of their pension savings before reaching the age of 50.
The State-run scheme wants amendments to the NSSF Act 2013 so that it aligns with existing pensions legislation, which permits workers to access benefits, including matched employer contributions, before 50 in cases such as unemployment or job transitions. NSSF Managing Trustee David Koross said the fund is advocating for partial withdrawals similar to arrangements in other pension schemes, noting that the current NSSF law does not provide that flexibility.
The proposal comes as the Retirement Benefits Authority presses for tighter restrictions on early withdrawals, arguing that access before 50 undermines long-term retirement security. The regulator has urged the Treasury to amend provisions that currently allow workers below 50 to claim up to half their benefits when changing jobs. It maintains that early access should be limited to exceptional circumstances such as serious illness or permanent emigration, warning that premature withdrawals erode retirement savings and leave many retirees financially exposed.
Data shows that over 80 percent of elderly Kenyans continue working to meet basic needs, raising concerns about the adequacy of pension coverage and payouts.
The NSSF argues that allowing limited early access would cushion workers facing retrenchment or redundancy. Under the current law, pension payments are made at 60, or from 50 for those opting for early retirement.
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Kenya’s pension coverage remains low, with more than 70 percent of workers retiring without meaningful benefits beyond modest NSSF payouts. For years, monthly contributions stood at Sh200, with average retirement payments below Sh250,000. Following contribution increases in February 2023, workers now remit up to Sh4,320 monthly, set to rise to Sh6,480, with employers matching the amounts. These higher contributions have expanded the fund’s assets to over Sh670 billion, up from Sh295.6 billion in December 2022.
The NSSF says the enlarged pool positions it to deliver significantly higher benefits in future and has won support from the Central Organisation of Trade Unions, which describes the proposal as forward-looking. Union representatives argue that while pensions are primarily for retirement, workers who lose jobs during tough economic periods should be permitted to access part of their savings.
The debate unfolds against a backdrop of longer life expectancy and weakening traditional support systems. As urbanisation reshapes family structures, reliance on extended family safety nets has diminished, placing greater strain on formal retirement systems and policymakers alike.
