When National Treasury Cabinet Secretary John Mbadi gazetted the Retirement Benefits (Post-Retirement Medical Funds (PRMF) Regulations, 2026, the announcement was framed, predictably, as a savings triumph.
Workers can now ring-fence part of their retirement benefits for healthcare, including up to 50 percent of accrued benefits at retirement, up to 10 percent of accrued benefits while still active, and 100 percent of Additional Voluntary Contributions. Contributions to PRMF also attract tax relief of up to Sh15,000 a month. Trustees will be vetted; funds registered and governance tightened.
It is, on paper, a tidy piece of financial engineering. But on the evidence contained in the Retirement Benefits Authority’s (RBA) own data, it is an answer to only part of the problem. The RBA’s 2025 Statistical Digest tells us that active pension membership stands at 4.02 million people, representing 18.6 percent of Kenya’s employed population and just 13.85 percent of the working-age population.
The PRMF contributions, even after a 647 percent jump, amounted to Sh1.86 billion against total pension contributions of Sh309.3 billion, roughly 0.6 percent of the total. Of that amount, Sh1.85 billion came from occupational schemes alone, while individual and umbrella schemes, barely registered.
The implication is difficult to ignore. A mechanism has been built within a pension system that still reaches only a minority of Kenya’s workforce. For the large majority outside formal retirement arrangements, the challenge is not simply deciding how much of an existing pension to allocate healthcare.
The PRMF framework can, therefore, deepen protection for people already inside the pension system. But without a parallel strategy for extending retirement savings to workers outside it, its reach will remain inherently limited. Even if we set coverage aside for a moment and grant, generously, that PRMFs eventually reach every formal-sector worker in the country, would that solve the underlying problem?
Kenya’s healthcare costs suggest otherwise. Medical inflation is already running well above general inflation. The Kenya Healthcare Federation has put medical inflation at roughly 11 percent annually, while Aon’s 2026 Global Medical Trend Rates report projects a medical trend rate of 13.5 percent for Kenya this year. That is almost three times the projected general inflation rate. That is not simply a savings-rate problem.
Kenya’s health-financing landscape operates across several parallel tracks: the Social Health Authority (SHA), still navigating the transition from NHIF; a fragmented private medical insurance market with significant variation in provider tariffs; and now PRMFs, regulated by the RBA, operating alongside the broader health-financing architecture overseen by the Ministry of Health and the insurance market supervised by the Insurance Regulatory Authority (IRA).
These institutions each have legitimate mandates. What is missing is the interoperability needed to connect to their financing, claims and healthcare data systems.
The Kenya Healthcare Federation’s 2026 Medical Industry Analytics Report illustrates the pressure, reporting a 54 percent increase in medical claims between 2022 and 2025.
When healthcare costs rise substantially faster than general inflation, simply placing more money on the demand side does not automatically make the system more affordable. It may simply create a larger pool of money to finance the same underlying inefficiencies.
According to the RBA’s 2024 Pensioner Survey, 71 percent of pensioners reported having some form of health cover, while 29 percent did not. Among those without cover, out-of-pocket payments remain a major source of healthcare financing.
The instinctive response to these figures is to focus on the savings gap: encourage people to save more and formalise a dedicated medical fund. But the figures point to a broader issue. Even where coverage exists, retirees still face gaps between what a health scheme covers and what healthcare providers charge. The transition from NHIF to SHA has also demonstrated how difficult it is to reform a national health-financing system while maintaining confidence, continuity and predictability for beneficiaries.
A PRMF cannot fix an unreliable insurance product or an inefficient healthcare market. A genuinely coherent national retirement-health policy should therefore start not only with a savings instrument, but with an integration mandate.
Kenya needs stronger interoperability between the RBA, the Insurance Regulatory Authority, SHA and the Ministry of Health; common data standards that allow healthcare spending and claims trends to be understood across financing mechanisms; greater transparency around provider pricing; and stronger reference points for the cost of common procedures and chronic-disease management.
There should also be a predictable mechanism through which PRMF resources interact with existing health-financing arrangements, including SHA and private medical insurance, rather than leaving retirees to navigate multiple systems independently. That requires government and industry to look beyond the financing vehicle and examine the market into which that money ultimately flows.
The PRMF framework is not wrong to exist but PRMFs should be treated as one component of a broader national health-financing strategy, not as the strategy itself.
Workers can save diligently. Funds can vest immediately, transfer portably and enjoy favourable tax treatment. But if those savings are ultimately spent in a healthcare market where costs continue to rise faster than incomes and where financing systems remain poorly connected, the country will have solved only half the problem.
Kenya does not primarily have a savings-rate problem in retirement healthcare, it has a systems problem, and no amount of contribution vesting will fix it.