The Insurance Regulatory Authority (IRA) and the Retirement Benefits Authority (RBA) plan a lifetime health cover for retirees, which would allow the pensioners to pay for it using their accumulated post-retirement medical savings.
The regulators say the plan aims to reduce the risk of exhausting their funds, as is common under the current model of buying annual medical covers.
The IRA and the RBA say the market currently lacks medical insurance products that operate like an annuity, allowing workers to use their savings to secure cover for the rest of their lives after retirement.
They said the absence of such a product forces retirees to rely on their post-retirement medical funds to buy annual health insurance, which can be costly and subject to premium increases as the risk of illness rises. This exposes retirees to the risk of depleting their medical savings within a few years of leaving employment, potentially leaving them without adequate funds to meet healthcare costs in old age.
The two regulators now want to engage industry players, including insurers and actuaries, in developing products that would allow retirees to convert their accumulated post-retirement medical savings into a single premium for lifetime health insurance.
“We are assessing whether insurers, including the Social Health Insurance Fund, would be willing and able to develop medical insurance that covers retirees for the rest of their lives,” Peter Mugambi Muthuri, the principal officer for the supervision directorate at RBA, said on Thursday during a stakeholder meeting convened by Liaison Group.
“If insurers are willing to take an annuity and make payments for the rest of a person’s life, there is a possibility they could also be willing to cover medical needs from the age of 60 until death through a single premium.”
RBA data shows contributions to the post-retirement medical fund hit Sh220.7 million at the end of June 2026 from Sh164.6 million in a similar period, pointing to continued uptake.
Mr Muthuri said there have been questions about the adequacy of the contributions to fund annual medical covers once members retire, prompting the need for reforms.
Kalai Musee, the director of supervision at the IRA, said the proposal for a single premium to cover retirees’ medical needs for the rest of their lives is under consideration. He expects such products to encourage uptake of savings in the medical schemes.
“The IRA commissioner sits on the RBA board, while the RBA chief executive sits on the IRA board, so discussions are ongoing. Instead of buying cover every year, the proposed model would provide cover for multiple years, mirroring what is done with annuities,” said Mr Musee.
He explained that insurers are free to develop such products, but would require actuarial studies before introducing them in the market.
Millicent Onditi, chairperson of the board of trustees at the Kenya Utalii College Pension Scheme, said shifting to multi-year medical cover would help distinguish post-retirement medical funds from ordinary pension savings, which many retirees also end up utilising on healthcare costs.
“We need a roadmap on how this fund can be futuristic. The current model where you save and once you retire you start buying annual medical covers is not sustainable. This will ensure those retiring do not deplete this fund and turn to pension and end up exposed,” she said.
Dennis Karanja, general manager for regional business at Liaison Group, said there have been inquiries from customers about the structuring of the post-medical insurance covers, pointing to the need for the insurance industry to respond through multi-year covers.
“The question is no longer just whether one is insured or not. It is about the quality of the cover and whether it can absorb shocks. The post-retirement medical fund was crafted to secure workers’ health in retirement, and therefore any gaps speak to the need for changes,” said Mr Karanja.
Retirement Benefits Regulation was amended in 2016 to allow members of retirement benefit schemes to make additional voluntary contributions to a medical fund for accessing medical benefits in retirement.
The RBA Act was amended in 2023 to formally recognise post-retirement medical schemes, followed by the gazettement of regulations for such schemes in August 2026. As at the end of September, there were 97 active schemes, with 19 sponsored by employers.
