Pension Withdrawal Rules in Kenya: What You Can Take When You Leave a Job

Updated 18 October 2026

Leaving a job, by resignation, redundancy or dismissal, raises one big money question: what happens to the pension you built up? In Kenya, the answer depends on the Retirement Benefits Act, the regulations made under it and the rules of your own scheme. This guide explains what the Retirement Benefits Authority (RBA) says you can withdraw, what must stay invested and the exceptions that allow a full payout.

Pension Withdrawal Rules at a Glance

The 50% Rule Explained

RBA’s member guidance says that if you leave your employer for any reason before the scheme’s early retirement age, you can be paid up to 50% of your total benefits, including employer contributions. The balance stays in the scheme until retirement, or you transfer it to another registered scheme such as your new employer’s scheme or an individual pension plan. The umbrella scheme regulations say the same: a member who leaves before early retirement age can ask in writing for not more than 50% of total accrued benefits and the investment income on them.

There is one complication. A 2019 amendment to the occupational scheme regulations (Legal Notice 88 of 2019) said scheme rules for defined contribution schemes should let a leaving member take their own contributions, with the employer’s share kept until retirement. Because scheme rules differ, ask your trustees or administrator for a written statement of exactly what you can take before you decide.

Your Three Choices When You Leave

1. Take the allowed cash portion. You get money now, but it is taxed and it shrinks your retirement savings.
2. Defer. Leave the benefits in the scheme. They keep being invested and you claim them at retirement age.
3. Transfer. Move the benefits to your new employer’s scheme or an individual pension plan. RBA says changing jobs does not affect your pension if you leave or transfer the money.

When You Can Take Everything

• Ill health. If you are permanently incapacitated and cannot work in any job suited to your education, training or experience, you can take all your benefits with medical evidence.
• Permanent emigration. If you are leaving Kenya with no present plan to return, trustees can approve a full withdrawal. The approval is copied to RBA.
• Reaching retirement age. At the scheme’s retirement age, the normal retirement rules apply.

How to Claim Your Benefits

1. Get your member statement. Ask HR or the scheme administrator for your latest balance, split into employee and employer portions.
2. Fill in the claim form. The administrator will ask you to choose payment, deferment or transfer.
3. Attach documents. These usually include your ID, KRA PIN, bank details and a clearance letter from the employer.
4. For a transfer, give the name and details of the receiving scheme.
5. Follow up in writing and keep copies of everything.

Tax on Pension Withdrawals

Lump sums paid from a registered scheme are taxed under the Income Tax Act. Withdrawals before retirement are generally taxed less favourably than payments at retirement. The scheme administrator deducts the tax before paying you and should give you a tax deduction statement. Ask for the gross amount, the tax and the net amount in writing so you can check it. Our PAYE calculator in Kiswahili and tax calculators cover the regular tax bands.

Think Before You Withdraw

Withdrawing early feels useful in a tough month, but every shilling taken now loses years of growth. A Sanlam and Allianz survey covered in our news report on early pension withdrawals found that more than half of job leavers tap their pensions early. Before you decide, use our retirement calculator to see how much smaller your pot will be at retirement if you withdraw now.

Common Mistakes

• Assuming the employer can refuse to pay your own contributions. The rules protect your vested benefits.
• Not updating contact details, which can leave benefits unclaimed for years.
• Missing the transfer option and taking cash you did not need.
• Not checking the tax deducted.

Frequently Asked Questions

Can I withdraw all my pension when I resign in Kenya?

Usually not. RBA says you can take up to 50% of total benefits if you leave before early retirement age. Full withdrawal is allowed for permanent ill health or permanent emigration.

What happens to the rest of my pension?

It stays invested in the scheme until retirement, or you transfer it to another registered scheme.

Can I withdraw my pension while still employed?

Generally no. Withdrawals are tied to leaving employment or reaching retirement age.

Is a pension withdrawal taxed?

Yes. The administrator deducts tax under the Income Tax Act before paying you.

Who decides what I can take?

The law sets the limits, and your scheme’s trust deed and rules apply within them. Ask the trustees for a written statement.