Kenya created over 822,000 new jobs in 2025, according to the Kenya National Bureau of Statistics Economic Survey 2026 released recently. At first glance, this signals a resilient economy. But the composition of those jobs tells a more important story that reshape how we think about savings, pensions, and financial security.
Over 87 per cent of these jobs were created in the informal sector. Today, 83.8 per cent of Kenya’s workforce, about 18.1 million people, earn their living outside formal employment. This is not a transitional phase. It is the structure of our economy.
Yet our pension system remains anchored in a different reality built around formal employment, predictable income, and payroll deductions. That model, while effective for a segment of the population, no longer reflects how the majority of Kenyans earn.
The retirement benefits sector in Kenya is, by many measures, strong. Pension assets have grown to over Sh 2.8 trillion, contributions continue to rise, and membership now stands at nearly 8 million. However, beneath this progress lies a critical gap.
The Economic Survey data shows that out of 21.6 million working Kenyans, only about 37 per cent are registered in pension schemes. More tellingly, just 52.4 per cent of these members are actively contributing. In effect, fewer than one in five workers are consistently saving for retirement.
This is a mismatch between system design and economic reality. For workers with irregular and unpredictable incomes, committing to fixed, regular contributions is difficult. When income fluctuates, financial priorities shift toward immediacy such as school fees, rent, food, and business reinvestment. Long-term savings, while important, often become secondary.
Informality is not the problem
The informal sector is often framed as a challenge to be formalised. But that perspective overlooks its central role in the economy. It is where most jobs are created, where entrepreneurship thrives and millions of Kenyans build livelihoods, often with remarkable resilience.
The issue is not informality itself. It is that our financial systems, including pensions have not evolved to serve it effectively. As long as retirement savings are tied primarily to formal employment, a significant majority of workers will remain excluded, regardless of how hard they work or how much they earn over time.
If current trends persist, with all indicators showing it will, Kenya faces a structural risk. A large and growing population will reach retirement age without adequate financial buffers. This will increase reliance on family networks and place additional pressure on public social protection systems.
It is a slow-moving risk, but a significant one. The Economic Survey data points to a future where economic participation does not automatically translate into financial security. That disconnect is where policy, innovation, and industry action must now focus.
Rethinking pensions for the economy we have
The way forward requires a shift in both mindset and model. First, pension products must become more flexible. Contributions should align with income patterns, allowing for small, irregular, and mobile-based payments that reflect how people actually earn.
Second, the focus must move beyond enrolment to sustained participation. Registration numbers alone do not build retirement security. Consistent contributions do.
Third, there is a need for stronger collaboration across the ecosystem between regulators, financial institutions, and technology providers to lower barriers and build trust among informal sector workers.
Encouragingly, there are already signs of behavioral change. The KNBS report shows that voluntary NSSF membership increased significantly in 2025, suggesting that many informal workers are willing to save when products align with their financial realities.
International examples show informal sector pension inclusion is achievable. Rwanda, India, and several Latin American countries have expanded retirement savings through flexible contribution models, mobile platforms, and government incentives. Their experience highlights a key lesson for Kenya: pension growth will depend on designing systems around how people actually earn and save.
A market opportunity hiding in plain sight
The informal sector is not just a policy challenge. It is also the largest untapped market for long-term savings in Kenya.
Expanding pension coverage within this segment is not only a social imperative, it is a commercial opportunity. It offers the potential to broaden the savings base, deepen capital markets, and strengthen financial resilience at the household level.
The bottom line is that the official data shows Kenya’s economy is growing and jobs are being created and the pension sector is expanding. However, these gains are not yet aligned. From where I sit, the central challenge is this: how do we ensure that as more Kenyans work, more Kenyans also build long-term financial security?
Building retirement savings within the informal sector will require greater trust, flexibility, and accessibility. Informal workers need simple, mobile-based pension solutions that accommodate irregular incomes. Financial education, incentives, and products linked to broader financial needs can help improve participation and build confidence in long-term savings.
The answer lies not in trying to reshape the informal economy into a formal one, but in reshaping our financial systems to serve the economy as it is.The future of pensions in Kenya will be determined in markets, farms, workshops, and small businesses, where most Kenyans earn their living today.
Simon Wafubwa is the CEO Enwealth Financial Services
