New Pension Regulations to Restrict Early Access for Kenyans Under 50.
Kenyans below the age of 50 may soon be unable to access their pension savings when switching jobs if the Retirement Benefits Authority (RBA) implements new regulatory changes. The proposed amendments aim to limit access to retirement benefits before the official retirement age, allowing only withdrawals from Additional Voluntary Contributions (AVCs).
The RBA has outlined 20 key proposals, including changes to Regulation 19(5) of the Occupational Retirement Benefit Scheme Regulations. This regulation currently permits employees who leave their jobs before the designated early retirement age to withdraw up to 50 per cent of their accrued benefits and the associated investment income. However, the proposed amendments seek to restrict this access solely to voluntary contributions.
Impact on Early Pension Withdrawals
Under the new rules, employees under 50 years who change jobs will only be allowed to withdraw up to 100 per cent of their AVCs along with the investment income generated from those contributions. The restrictions are set to take effect in July 2025, subject to stakeholder feedback and approval.
The RBA has justified the move by emphasizing the need to prevent premature withdrawals and enhance long-term financial security for retirees. The authority argues that an increasing life expectancy combined with a low savings rate makes early pension withdrawals detrimental to retirees’ income replacement ratio.
Addressing Financial Security Concerns
The RBA has expressed concern that early access to pension savings leaves many Kenyans financially vulnerable in old age. To counteract this issue, similar amendments have been proposed for the registration and operation of umbrella retirement benefits schemes, which cater to employees of multiple participating employers. Additionally, the new restrictions would apply to Individual Retirement Benefits Schemes, which provide retirement benefits to individuals not covered by employer-sponsored plans.
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Public Participation and Implementation
Before the proposed changes come into effect, Kenyans have been invited to submit their comments and feedback. The final implementation is scheduled for July 2025, ensuring ample time for public discourse and necessary adjustments.
The RBA maintains that these reforms will strengthen the adequacy of retirement savings, ultimately securing financial stability for future retirees.
New Pension Regulations to Restrict Early Access for Kenyans Under 50.
