Relief for MSME workers as new pension scheme opens door to affordable retirement savings

Millions of workers in Kenya’s informal and small business sector are set to gain access to affordable retirement savings following a new partnership between financial services firms Octagon Africa and Alexforbes.

The deal aims to bring micro, small, and medium-sized enterprises (MSMEs) into the country’s formal pension system through the Octagon Umbrella Retirement Benefits Scheme, which will allow even the smallest businesses, with as few as three employees, to enrol their workers into structured retirement plans.

The scheme will also bundle in group life and medical cover, and is designed to be cost-effective and easy to manage through digital platforms that promote transparency and compliance.

Speaking during the launch, Octagon Africa Group CEO Fred Waswa said the initiative would help protect employees in smaller enterprises while improving staff retention and productivity.

“We are giving MSMEs the tools to protect their employees while boosting retention, productivity, and long-term financial security. These businesses are the backbone of our economy, yet most lack access to retirement solutions. With Alexforbes, we are changing that reality,” said Waswa.

Waswa noted that Octagon will also provide advisory services and financial literacy programmes to support employers and employees in making informed decisions about their future financial well-being.

Alexforbes Chief Commercial Officer Craig Bentley said the partnership merges international best practices with local insight to create solutions that work for small businesses.

“Through this scheme, we are combining global expertise with local understanding. Financial well-being should not be a privilege for the few — it must be accessible to all,” Bentley said.

According to the Kenya National Bureau of Statistics (KNBS), more than 7.4 million MSMEs in Kenya employ about 15 million people and contribute over 40 per cent of the country’s GDP.

However, over 70 per cent of these enterprises do not offer formal retirement benefits, leaving millions financially vulnerable in old age.

Data from the Retirement Benefits Authority (RBA) shows that retirement fund assets grew to Ksh.2.23 trillion in 2024, up from Ksh.1.58 trillion in 2021, with umbrella schemes among the fastest-growing.

Despite this growth, only 4.4 million Kenyans are active contributors, just 26.6 per cent of the working-age population.

The partnership between Octagon Africa and Alexforbes is expected to narrow this gap and boost pension coverage in a sector that remains largely underserved.