A New Savings Avenue for the Informal Economy

NAIROBI, KENYA – Financial services provider Liberty Kenya has introduced the 'Boresha Maisha' pension scheme, a new initiative primarily targeting self-employed individuals and workers in the vast informal sector. The plan is designed to offer a flexible and accessible retirement savings solution for a segment of the population largely excluded from the formal pensions system. The product is split into two main offerings: an individual plan for personal savings and an umbrella fund for employers to manage their staff's retirement benefits. Key features promoted include the ability for members to contribute at their own pace, professional fund management, and tax advantages on contributions. Additionally, the plan incorporates a last expense coverage of KES 100,000.

Kenya's Pressing Pension Coverage Gap

The launch of products like 'Boresha Maisha' comes at a critical time for Kenya's retirement benefits sector. According to the Retirement Benefits Authority (RBA), pension coverage remains low. As of 2024, only 26% of Kenya's working population was covered by a pension scheme. This leaves a significant majority, particularly the over 16 million Kenyans in the informal sector, facing old age without a financial safety net. A 2024 Pensioner Survey by the RBA painted a stark picture of the challenges retirees face, with many citing inadequate pension benefits, the high cost of living, and the burden of supporting dependents as major struggles. The survey revealed that only 41% of retirees felt their pension benefits were sufficient to live on.

Government Reforms and Industry Push

Recognizing the urgency, the Kenyan government and the RBA have embarked on a series of reforms. On August 29, 2024, the RBA launched its Strategic Plan for 2024-2029, which aims to increase pension coverage to 34% of the workforce by 2029. A central pillar of this strategy is to develop products specifically tailored for informal sector workers. This aligns with a broader government announcement in October 2024 to expand social protection to informal workers, including mandatory pension contributions. The National Treasury is also exploring reforms to encourage pension schemes to diversify their investments beyond traditional assets like government securities to boost returns for savers. Total pension fund assets in Kenya grew to KES 2.23 trillion in December 2024, up from KES 1.84 trillion the previous year, indicating a growing pool of domestic savings.

Addressing Early Withdrawals and Financial Literacy

A significant challenge undermining pension adequacy is the trend of early withdrawals. Many Kenyans access their savings when changing jobs, depleting funds meant for retirement. To counter this, the RBA has proposed new regulations, expected to take effect in July 2025, that would prevent workers under the age of 50 from accessing their pension savings, except for their additional voluntary contributions. Alongside regulatory changes, there is a strong emphasis on enhancing financial literacy. A lack of understanding about concepts like compound interest and long-term financial planning contributes to late retirement planning and insufficient savings. Initiatives like the partnership between Octagon Africa and Alexforbes, announced in October 2025, aim to bring affordable retirement plans to micro, small, and medium-sized enterprises (MSMEs), which employ millions but often lack formal benefit schemes. These efforts, combined with products like 'Boresha Maisha', represent a multi-pronged approach to fostering a stronger savings culture and ensuring more Kenyans can retire with dignity.