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Kenya’s pension sector is facing mounting pressure as fewer new workers are enrolling in retirement schemes, with the rise of casual and gig employment holding back growth in membership despite an increase in overall contributions and fund values.

Fresh data from the Retirement Benefits Authority (RBA) shows that new pension contributors dropped sharply to 245,581 in 2024, highlighting the slowdown in formal job creation and the expanding reliance on short-term and outsourced work arrangements.

This pushed total active pension scheme members to 3.75 million, but the base of new entrants is shrinking even as the sector posts record growth in assets.

Most of the new registrations were linked to mandatory statutory contributions under the National Social Security Fund (NSSF), which accounted for 200,183 of the members added in 2024.

Analysts say the trend underlines deep weaknesses in the labour market, where outsourcing, short contracts and casual hiring are leaving large sections of the workforce outside regulated retirement plans.

The RBA noted that the reforms under the NSSF Act and efforts to expand coverage have boosted inflows, but the impact on widening membership has been limited.

“Total contributions rose significantly in 2024, largely driven by increased employer and member contributions following the implementation of enhanced NSSF rates,” the survey says in part.

It further observed: “While normal contributions from both parties showed strong growth, additional voluntary contributions and medical fund contributions declined, suggesting a shift in focus toward mandatory contributions.”

Kenya’s pension coverage ratio stood at 26.57 per cent in 2024, meaning nearly three out of every four working-age Kenyans — between 18 and 60 years — are not saving for retirement through a regulated scheme.

This leaves the bulk of workers in the informal economy without structured retirement savings.

At the same time, contributions to retirement schemes jumped by 29 per cent to Sh263.5 billion in 2024, reflecting higher employer and employee remittances under the phased rollout of new NSSF rates.

This growth helped lift the total industry fund value to a record Sh2.23 trillion, up from Sh1.84 trillion in 2023, with government securities remaining the most preferred investment. The rise was supported by a 74 per cent surge in investment income and steady asset growth.

Even so, experts caution that without stronger formal job creation, the industry will continue to face limits in widening its coverage. “The strength of the pension sector is being supported by larger schemes and higher contributions, but the base of contributors is not widening fast enough,” the RBA noted.

The regulator also raised concern about unremitted contributions, which climbed to Sh69.4 billion in 2024, mainly due to delayed payments by employers, particularly in public institutions.

In response, the authority is pushing for amendments to the law to hold chief executive officers and accounting officers of state agencies personally liable for collecting but failing to remit statutory deductions.