Kenyans under 50 will not be able to access their pension savings when they change jobs if the new proposals by the Retirement Benefits Authority (RBA) are passed.
The RBA is proposing amendments to retirement benefits regulations to prevent access to benefits before retirement age, except for Additional Voluntary Contributions (AVCs).
"Amend provisions on the preservation of benefits to prevent access of benefits before retirement age, except AVCs," reads part of the 20-point proposals by RBA.
Specifically, the RBA proposes to amend Regulation 19(5) of the Occupational Retirement Benefit Scheme Regulations, which allows a member who leaves employment before the specified early retirement age to opt for payment of up to 50 per cent of their total accrued benefits and the investment income on those contributions.
However, the new proposals by the RBA plan to restrict this to voluntary contributions only.
The amendment seeks to change the early access to pension for employees under 50 years when changing jobs to state that such a member may only opt for payment of up to 100 per cent of their voluntary contributions and the investment income accrued on them.
The proposed changes are expected to take effect in July 2025. According to the RBA, the move aims to curb early withdrawals and ensure long-term financial security for retirees.
RBA argues that the proposals aim to promote the adequacy of retirement savings for members.
According to RBA, due to the increasing life expectancy and low savings rate, early access to benefits further reduces the income replacement ratio for members.
The authority insists that early access leaves many Kenyans vulnerable in old age.
Similar amendments are proposed for the registration and operation of umbrella retirement benefits schemes. These schemes are designed to provide retirement benefits to employees of multiple employers who participate in the scheme.
RBA has proposed the same for Individual Retirement Benefits Schemes, which provide retirement benefits to individuals who are not part of an employer-sponsored scheme.
Kenyans have been invited to give their comments on the proposals before they take effect in July.
