The National Assembly has clarified the proposed amendment to fully exempt pension benefits for dependents.

The clarification comes as the Departmental Committee on Finance and National Planning is set to begin week-long public participation exercises on the Finance Bill 2026 across 13 counties starting June 2, 2026, marking a key stage in Kenya’s budget and tax reform process.

Taking it to their Facebook account on Monday, June 1, 2026, the National Assembly has noted that the proposed bill introduces a significant relief measure aimed at supporting bereaved families during financially difficult times. Under the proposal, pension benefits paid to a spouse, children, or other dependents of a deceased pension scheme member would be fully exempt from income tax.

“Tomorrow, the Departmental Committee on Finance and National Planning is scheduled to commence week-long public participation exercises on the #FinanceBill2026 across 13 counties. But what should you know about the bill?” Parliament noted in a statement.

“The bill seeks to cushion families during their most difficult times. It proposes that pension benefits paid out to spouses, children, or dependants of a deceased pension scheme member will be entirely exempt from income tax,” the statement added.

According to the National Assembly, the bill, if passed, will provide a welcome break for bereaved families when times are tough. The proposal would mean that pension benefits payable to a pension scheme member’s spouse, children, or other dependants upon his death would be entirely income-tax-free.

The legislative house has further noted that, as far as the facts and the figures are concerned, this means that the family will get 100% of pension benefits that the deceased member earned during his lifetime without having to pay any income tax on it. The exemption is intended to make sure that survivors are not put at further financial disadvantage when they are struggling to cope with their losses and that retirement savings are used to ensure security for those who are dependent.

Involving residents of 13 counties.

The Departmental Committee will meet with citizens, stakeholders, and interest groups in 13 counties for the hearing process as required by the constitution, which mandates that the public be involved in the legislative process.

The forums will be utilised to obtain feedback on the different proposals in the Finance Bill 2026, such as tax changes, revenue measures, and social protection measures.

Relief for grieving families

If implemented, the pension tax exemption will be a significant change in Kenya’s taxing of pension benefits paid to pensioners. Backers of the proposal say it provides greater social protection because the dependents would get the full amount of financial support the deceased contributor had in mind.