Pension firm calls on Gov’t to review post-retirement laws on taxation

Retirement fund Zamara Retirement Fund (ZFRF), has urged the Government to consider reviewing taxation law that bars retirees from enjoying tax free access to their pensions upon attainment of the 60 years.

Currently retirees have to wait for 5 years to enjoy tax free access to their pension payments yet they officially retired from service.

ZFRF has also urged the Government to consider reviewing the amount and level of tax deductible contributions into retirement benefits funds in Kenya. This mount has remained at a fixed figure of Ksh 20,000 per month since the year 2005.

It has also called on State to increase monthly pension amount to factor in inflation.

Addressing industry stakeholders during a breakfast meeting, Zamara Fanaka Retirement Fund Chairlady Lucy Kambuni said there was need to repeal the law so that Kenyans are able to retire honorably and enjoy their hard earned money without worrying of paying for taxes yet they have retired from employment.

“5 year period for retirees to wait before accessing their funds tax free is such a long wait that makes members uncomfortable and there was no reason to subject them to such an arrangement since they have left service after attaining the mandatory age, the government needs to appreciate their services by allowing tax exemption to use their money”, Ms Kambuni urged.

Already the country faces an emerging old age poverty crisis where over 9.2 million people are expected to attained retirement age of 60 years by 2050 and nearly 85percent of them do not have a pension plan. This means the government will be overburdened to fund the lifelong welfare of millions of elderly people leading increased poverty in the country.

Such statistics should be a wakeup call for the government to develop an effective and immediate policy review on pension laws to make it more attractive for Kenyans to start saving from early age as this will save the country about 300 billion annually to fund elderly social welfare.

Zamara Group Executive Director James Olubayi said there was need for a sustainable strategy against the imminent old age poverty calamity facing Kenya, and the Government must act fast by incentivizing retirement policies to attract many Kenyans and grow the pension industry.