98 per cent of Kenyan employees to retire poor

Nine out of 10 companies in Kenya do not have a retirement benefits scheme for their staff, a fact that is likely to make employees’ retirement life miserable and raise the country’s burden of dependency.

Most employees in Kenya are not registered in any retirement scheme.

Jubilee Insurance Pensions Business General Manager David Ogega noted that of the current 93,000 employers, only 1,200 schemes are registered with the Retirement Benefits Authority (RBA), which is the regulator for pensions business in the country.

“That tells you that there are very many employers out there who have not established schemes for their employees. This means that there are very many people who may retire without money,” he added.

He was speaking during the Jubilee Insurance Pensions Business Unit annual general meeting for the pensions’ clients under the Jubilee Insurance Umbrella scheme. The scheme is a plan that provides a savings vehicle to accumulate funds for the members upon retirement.

Mr Ogega added that Kenyans’ life expectancy rate has improved due to better health care and improved living standards, however, family support is reducing and people will be more independent in retirement as opposed to the African practice where families took care of their parents at old age.

According to Evans Mutiga, the supervision officer at Retirement Benefits Authority (RBA), the regulator has done some research and come to the conclusion that people without any retirement benefits suffer a lot on retirement.

Jubilee Umbrella Scheme invested most of its members’ contributions, about 51 per cent, in Treasury bills and bonds. The other areas where the scheme put its money was in quoted shares, which took up 21 per cent of the contributions.

Contributions increased by Sh149 million as members in the scheme also increased. Returns also increased by Sh410 million due to increased contributions and members balance. With a membership of about 5 million, Jubilee Insurance controlled about 27 per cent of the pension market as of 2014.

It was followed closely by ICEA Lion, which has a market share of 22 per cent. Britam was third with a 15 per cent market share. Other insurance companies in the pension scheme are Liberty, Kenindia, Pan Africa Insurance, UAP Insurance, Monarch, Saham, APA, Madison, Pioneer and Kenyan Alliance.

Pension scheme in Kenya has been the forte of the National Social Security Fund (NSSF), the Government agency responsible for the collection, safekeeping, investment and distribution of retirement funds of employees in the both the formal and informal sectors.

Participation for both employers and employees is compulsory. NSSF is both a Pension and Provident fund.