What Happens to Your Pension When You Change Jobs?

Switching employers is an exciting milestone often driven by the promise of growth, better opportunities, or a fresh start. But amid the transition, one critical question tends to linger: “What happens to the pension you have accumulated with your (now) former employer?”

In Kenya, most employees contribute to two pension schemes. The National Social Security Fund (NSSF), which is the public pension scheme, and an employer-sponsored pension or provident fund, which is a private scheme.

When you leave employment, private pension schemes offer four options for managing your pension savings:

1. Leave your fund with your employer and wait until retirement age.

2. Transfer the funds to your new employer’s scheme.

3. Transfer your funds into an individual personal pension.

4.  Withdraw a portion of the funds and move the rest to No. 3 above.

Withdrawing your pension during a job change erodes savings through lost compounding and heavy taxes.

Since July 1st, 2025, early withdrawals from pension schemes have become significantly more punitive. If you’re under 50 and have been in the scheme for less than 20 years, your withdrawal is subject to the following tax treatment:

Example:

Hence, this is not a great option.

Not all employers offer a private pension scheme, so you may move from one job that provides one to another that does not. In such cases, a better option is to consolidate your previous pension savings into an individual personal pension plan. This helps you keep track of your retirement funds, avoid leaving dormant accounts, and continue benefiting from compound growth over time.

We are pleased to announce that the declared rate of return for our pension fund for 2025 is 12.25%, up from 11.5% in 2024. Would you like to consolidate your existing pension funds, or start a new pension plan? We are here to help.

Talk to us on 0709 551 150 or WhatsApp 0700 531 280.