Taxes on pension are payable on withdrawal from the pension or when the pension is paid to the saver.
It not that taxes are not payable but they are deferred just like the 401(k)'in US

@milken so what is the advantage of all these struggles if the taxman will still come to collect his dues at a later date?

When you want to access your pension before retirement age then it is taken as savings not pension and I think that's why the clever gova has allowed people to access such a big percentage of their pension. Retirement homes will be the order of the day in 2030.

@Aguytrying Tax deductible simply means that if your Gross Income is Ks50,000 and you take out an individual pension plan of e.g. Ks10,000 then the amount of income you can be taxed reduces to Ksh40,000. The maximum allowable amount (for retirement purposes) is 20K per month. Meaning if you decide to take out an IPP for 40K p.m. then KRA will tax you on any amount above 20K.

@Impunity the detail here is that you have to be saving up towards the specific purpose e.g. home ownership, pension...etc. So no, you can't withdraw your savings to buy a mat....not unless of course you can convince KRA that your dream retirement home IS a matatu :)

To ALL. The savings avenues and incentives we're discussing are IDEAL for those who've just began working, those who currently don't have any property/home and would like to own one, those who actually want to maintain their lifestyle after retirement. Or simply those who find it hard to save!

I'm in HR when i look at the payroll and what somepeople (myself included) are paying in taxes it makes me WONDER...ignorance can indeed be VERY expensive.