Kenya Kwanza Boosts Tax Exemptions for Pension Savings: A Win for Retirement Planning

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Kenya Kwanza Parliamentary Group, led by Molo MP Kuria Kimani, has made a significant decision to increase taxable pension savings by 50%. If approved by the National Assembly, retirement savings of up to Sh30,000 will be exempt from tax, up from the previous Sh20,000 limit.

Molo MP Kuria Kimani speaks during the Kenya Kwanza Parliamentary Group meeting held at State House on June 18, 2024
Image: PCS

" To support our pension contributions, because we will one day all of us retire, we are increasing the amount allowable for tax exemptions from sh20,000 per month to Sh30,000 per month,'' said Molo MP Kimani Kuria.

Briefing the country after the State House meeting, Kuria said the incentive was a major boost to Kenyans seeking to save more for their pension.

''We are now moving our pension schemes to exempt, exempt, exempt at contribution and exempt when you receive your pension,'' he said.

The amount is pension contributions are made by employees to registered pension schemes and provident funds.

The adjustment aims to encourage individuals to save more for their retirement while enjoying tax benefits.

However, it’s crucial to note the conditions for tax exemption.

The tax-exempt contributions made by an employee are capped at the lesser of the total contributions, 30 per cent of the employee’s pensionable income, or Sh360,000 annually.

Contributions exceeding these limits will be subject to income tax.

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