NAIROBI, KENYA: Retirement Benefits Authority (RBA) has been urged to introduce a post-retirement medical scheme to ensure pensioners maintain a dignified way of living.
Alexander Forbes, a leading retirement fund consultants said a scheme similar to the one enjoyed by the members of the defence forces should be introduced to the pensioners to offer them relief from the medical costs.
Kenya Defence Forces retirees enjoy post-retirement medical scheme totaling Sh2 billion and the trustees and sponsors of the just concluded annual Alexander Forbes conference in Mombasa said stakeholders should focus on how retirees should enjoy the benefits of the fund.
Over 250 trustees and sponsors of the two-day regional conference also discussed several issues affecting the fund and investment opportunities and introduction of new product like the proposed post-retirement medical scheme.
Also discussed was how to increase the pension which the participants noted was currently 20 per cent of what one was earning before he retires. Alexander Forbes Chief Executive Officer Sundeep Raichura said the global accepted pension is 70 per cent of a salary one was receiving before retirement but currently in Kenya members are paid 20 per cent which is very low.
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“We are discussing how we can improve what members are paid when they eventually retire,” he told participants at the regional conference.
He said whereas over the past decade and a half in Kenya, the focus of pension fund trustees had been much on making sure their schemes were properly run and compliant with legislation, it was time to shift the focus to improving the outcomes for members of retirement funds through a more holistic approach to understanding the factors impacting members’ benefits.
“While simply offering a pension scheme may have seemed like enough in the past, a growing body of research is highlighting the important role that trustees can play in improving the level of benefits that members can enjoy by influencing constructive behaviour on the part of members and sponsors,” said Raichura.
Nairobi Securities Exchange (NSE) Chief Executive Officer Geoffrey Odundo said there was need to increase the pension coverage to cover people in the informal sector. He said pension fund industry has experienced significant growth from about Sh150 billion as at December 2002 to Sh700 billion in December 2013.
“About 60 per cent of total pension industry assets in Kenya are currently invested in listed securities with a vast majority placed in Government Securities,” he said, adding that the fund should invest in the new products that the NSE is bringing to market.