Retirement savings will now serve a second purpose for workers who choose to protect part of their pension against future medical bills, following new rules allowing eligible members to channel a portion of their benefits into medical funds.
The Retirement Benefits (Post-Retirement Medical Funds) Regulations, 2026, give members an option to move up to 50 per cent of their accumulated retirement benefits into a registered post-retirement medical fund when they retire.
National Treasury Cabinet secretary John Mbadi said the regulations provide a formal system through which workers can prepare for healthcare costs beyond their working years.
Under the new arrangement, money placed in a post-retirement medical fund will remain available for healthcare-related needs. Members can use it to obtain insurance cover, settle medical bills or recover money already spent on treatment.
The funds can also be transferred to another approved medical cover provider. A member may alternatively use the money to buy an annuity that can be used to meet medical insurance premiums.
The rules further provide for dependants to benefit from the medical funds, depending on the arrangement selected by the member.
Mbadi said in the Gazette notice: “Where a member retires, the member may opt to transfer up to fifty per cent of his or her accrued benefits in a retirement benefits scheme to a registered post-retirement medical fund.”
The new arrangement gives retirees the choice of keeping all their retirement benefits for normal use or setting aside a substantial share specifically for healthcare.
For workers who decide to take the medical fund option, the money will be protected for the purpose for which it was set aside. This could help prevent retirement savings from being used up by medical expenses.
The regulations come with different provisions depending on the type of retirement scheme. Members of pension schemes who are not in provident funds can transfer up to 10 per cent of their accrued benefits before commutation into a post-retirement medical fund.
Additional voluntary contributions can also be moved into the funds.
Workers will also be able to prepare for their healthcare needs before reaching retirement age. The regulations allow both employees and employers to make contributions to post-retirement medical funds during the period of employment.
Contributions may be made through a fixed amount or calculated as a percentage of a worker's employment income.
The framework provides for two types of post-retirement medical funds — stand-alone funds and those operated within retirement benefits schemes.
The funds will have to be registered and will fall under the oversight of the Retirement Benefits Authority.
Trustees of retirement benefits schemes will also be required to give members who have reached retirement age an opportunity to move part of their retirement benefits into an approved post-retirement medical fund.
The regulations set out how the money can be used once transferred, ensuring it remains available for medical-related needs rather than becoming part of the retiree's ordinary retirement cash.
The move provides workers with another way of planning for life after employment, particularly by allowing them to start building a healthcare reserve while still earning an income.
Existing post-retirement medical funds have been given 12 months from the start of the regulations to meet the new requirements and operate within the framework.
The regulations were made under the Retirement Benefits Act and establish the legal basis for the registration and operation of post-retirement medical funds.