Alexander forbes vuna pension plan grows assets by 14 pc to Sh1.6b

NAIROBI, KENYA: Alexander Forbes Vuna Pension Plan has registered a 14 percent growth in its asset base which now stands at Sh1.6 billion, up from Sh1.4billion in 2015. The individual retirement scheme now has 30 participating employers and over 2,400 members.

The firm’s head of Division Retail, Angela Okinda said despite the difficult year for investors, the scheme managed to register a steady growth in its asset base which she attributed to the positive returns and consistent member contributions.

Addressing members during the 7th Annual General Meeting (AGM), Ms Okinda stated that many businesses in Kenya still lack pension funds for employees, a worrying culture which also ties with studies from the International labour organization (ILO) which indicate that only about five percent of the Sub-Saharan African population is covered by the contributory pension programmes.

“Even though it has been a difficult market for investors, Vuna membership and asset growth has been on the increase, a clear demonstration that this product we are offering is what the market need”, Ms Okinda added. She said individual pension plans can play a critical role in enhancing a dignified life in sunset years for retirees if well harnessed.

In Kenya over 56 per cent of the elderly people rely on their relatives and well-wishers for basic needs such as housing and medical care, a situation that can be easily addressed if Kenyans embraced the culture of saving for retirement from an early age.

“The youth in this country has a lot of potential to generate good income and make adequate savings for their future. However this is not the case as many prefer luxurious lifestyles with little or no regard to saving. We need to change this mind-set and seek expert advice on financial management,” Ms Okinda advised.

Personal pension plans are suitable for the self-employed and employees who desire to save for their retirement especially when they do not belong to any retirement benefits scheme. It enables one to remit monthly payment or a lump sum to pension providers who then invest the money on their behalf. The final worth of the pension fund will usually depend on one’s accumulated contributions and performance of the fund.

She said the scheme is designed to assist individuals and groups to build up retirement capital in a tax efficient way, in order to provide retirees with sufficient income during retirement.  The scheme also allows members to retire at any age after 50 years but earlier than 75 years and offers various benefits such as flexible contributions and optimal investment returns to members.

She argued that even though short term cash investments can be safe for an individual, people need to be encouraged to pursue long term saving as cash returns cannot beat those of a balanced portfolio comprising of shares and bonds.