The Retirement Benefits Authority (RBA) has expressed concern over the poor retirement savings culture among Kenyans.
According to the authority, the retirement savings rate in the country stands at 13 per cent, a figure termed too low in the region and far below the world’s average of 20 per cent.
This emerged during a Trustees Management forum held at Great Rift Valley Lodge in Naivasha organised by Liaison Financial Services and attended by liaison officers from various companies.
RBA Chief Executive officer Edward Odundo identified the young generation and workers in the informal sector as the worst affected when it came to retirement savings.
Addressing the Press on the sidelines of the workshop, Dr Odundo noted there was no pension scheme targeting the workers and hence the poor savings rate.
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The CEO was however quick to note that the pension scheme industry was on the rise, adding that they expected it to hit the shilling one trillion mark by the end of this year.
“In 2000, the sector was worth Sh50 billion but by the end of this year we expect to reach Sh1 trillion in terms of savings and investment,” he said.
Odundo attributed the success in the industry to a proper regulatory framework, good governance and training of staff.
“Previously, we had cases of pension money being stolen due to poor governance but due to proper legislative legal framework, we have seen the sector grow tremendously,” Odundo said.
He said the country had 1,200 schemes, adding that plans were underway to work with Huduma centres to reach more people in the counties.
“We shall petition the Central Bank over the Sh2.7 billion lost by various schemes, which were saved by Imperial Bank that went under,” he said.
South Africa ahead
Uchumi Supermarkets CEO Julius Kipng’etich, who was the guest speaker, noted the country’s saving rate stood at 13 per cent against a target of 30 per cent recommended in the 2030 Vision blueprint. Dr Kipng’etich challenged pension schemes to be more innovative so as to reach more workers, mainly those working in the informal sector.
“We need to relook at how we manage our savings so that we don’t overburden our children in our old age,” he said.
On his part, Liaison Financial Services team leader Tom Mulwa termed the future of the pension scheme in the country as very bright.
“Currently, South Africa is ahead of us in this sector and our penetration levels are over 20 per cent better than the insurance sector,” he explained.