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% of these jobs were created in the informal sector. Today, 83.8% 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 KSh 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% are registered in pension schemes. More tellingly, just 52.4% 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 formalized. 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.

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