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Diversified financial services group, Britam has come up with an investment pension product targeting retired employees who will now have access to their retirement savings as an income.
The product tagged Platinum Drawdown Plan will be managed through a guarantee fund and runs for a minimum of 10 years during which a member is expected to receive an income from the trust of up to 15 per cent of the total savings deposited in the account as long as the fund is active for a period of one decade.
Speaking last month during the product launch, Group Managing Director of Britam, Benson Wairegi said the scheme – the first in the market will target retired Parastatals employees, workers in Blue chip companies as well as retired high net earners who have money for savings but do not want annuities and have met the minimum threshold and can invest up to a minimum of Sh5million from their retirement savings into the kitty.
“The product is targets retired individuals and most especially government workers who also have an option to receive a refund of the remaining fund at the end of the statutory period of ten years,” he said, adding that upon attaining 65 years, a member will no longer pay income tax on their retirement benefits.
An annuity is an insurance product that pays out income, and can be used as part of a retirement strategy.
Data from Retirement Benefits Authority (RBA) shows that Kenya’s pension investments currently stands at $7.8billion, representing a10 per cent growth in the past decade and 27 per cent increase year on year at the end of 2013, while assets held by individual retirement benefits schemes have also grown by 24 per cent in the one year to June 2014, outpacing the sector average growth of 18 per cent.
About Sh5.3billion came into the insurance sector through pension schemes in 2014 alone and the segment is poised for further growth according to Insurance Regulatory Authority (IRA) technical Director Agnes Ndirangu, who says insurers should also target the group in order to boost insurance life segment whose penetration ration has remained relatively low at just 1.4 per cent.
Overall according to Association of Kenya Insurers (AKI) recent data, insurance penetration declined last year to 2.92 per cent compared to 3.44percent in 2013.