Savings in stand-alone post-retirement medical funds grew nearly seven-fold last year, signalling growing efforts by employees to cushion themselves against the negative impact of rising healthcare costs after retiring.
Fresh data from the Retirement Benefits Authority (RBA) show that contributions to medical funds under Post-Retirement Medical Funds (PRMFs) rose by 646.9 percent to Sh1.86 billion in 2025, up from Sh249.1 million a year earlier.
The increase in PRMF was the fastest across all pension contribution categories.
“Contributions to the Post-Retirement Medical Fund (PRMF) increased by 647 percent between 2024 and 2025, rising from Sh249.15 million in 2024 to Sh1.86 billion in 2025 as more schemes continued to set up PRMF funds,” RBA said.
PRMFs are schemes that allow individuals to save specifically for their healthcare costs after retiring. Under the arrangement, workers have the option of saving through a medical fund without being required to be members of the sponsoring medical scheme.
The sharp growth in savings at PRMFs comes at a time when medical bills have become a major pain point for both employers and households amid rising healthcare costs. This has forced many to save for a future cushion as they go into retirement.
A recent World Bank study estimated that about 1 million to 1.1 million Kenyans fall into poverty each year because of costs related to health care, which mainly hurt households from disadvantaged socioeconomic backgrounds. Many households access healthcare through out-of-pocket(OOP) expenditure.
The elderly and people affected by chronic conditions are the worst hit by the OOP expenditure that has continued to rise over the years despite increased budgets by the State for healthcare.
“This is a concerning trend, as paying at the point of care for services or drugs creates financial barriers and exposes households to catastrophic health spending,” the World Bank said following its study.
The growth in savings in PRMFs also points to an increasing number of such schemes by employers seeking to strengthen employee welfare and long-term financial security.
The Treasury had in 2024 directed all pension schemes to amend their rules to allow members to contribute to PRMFs, in a move aimed at helping workers prepare for healthcare costs in old age.
Under this framework, employees, employers or both can make voluntary contributions to PRMFs.
The savings are used to finance medical cover after retirement, either by purchasing health insurance or generating annuity income to pay insurance premiums.
Contributions are typically set at a minimum of one percent of a member’s pensionable salary, helping retirees spread healthcare costs over their working lives, instead of relying solely on their pension benefits.
RBA data further shows that total pension contributions rose 29 percent to Sh309.3 billion in 2025, reflecting higher contributions from both employers and employees.
“Between 2021 and 2025, total contributions grew from Sh135.51 billion to Sh309.26 billion, a 29 percent growth,” added RBA.
Employer normal contributions increased 14.7 percent to Sh156.8 billion, accounting for just over half of all pension inflows.
Mandatory contributions from employers rose 17.8 percent to Sh137.6 billion, while their additional voluntary contributions grew 30.9 percent to Sh11.5 billion.
