Stakeholders root for pension reforms
By Remie OTIENO
Kenya’s retirement pension system will require ruthless reforms if it is to meet the needs of the aging population to come, according to industry players’ suggestions, which want the sector to be all-inclusive.
That will require overhauled frameworks, not new schemes which should see both formal and informal sectors actively participate in the saving culture which is considered very low by Kenyan standards.
Speaking at the opening conference of the two-day Pension Trustee Summit by Zamara, former Education CS Prof. George Magoha said that there was a need for further enhancement and improvement of the retirement benefits framework in Kenya by ensuring wider coverage across the working population and especially the expansive informal sector which remains excluded in saving for retirement.
“There is a need to increase the levels of savings in both private sector and public sector retirement benefit arrangements to ensure that those covered receive an adequate benefit that will cover their basic needs when they retire”, he said.
A recent report by Zamara Kenya Pensions Watch 2022, shows that the coverage of the current pension in Kenya was just around 17.7 percent of the total employed population in Kenya and a staggering 83.2 percent of employed Kenyans in the informal sector have no access to any form of pension savings.
Those concerns are also shared by the Chief executive of Zamara Investments, Sundeep Raichura who is convinced that the provision of retirement benefits was limited to the public sector workers and that the private sector was adequately slow in rolling out pension products tailored to the informal sector.
“The provision of retirement benefits should be a universal basic need and there is a need for further enhancement and improvement of the retirement benefits framework in Kenya to make it more inclusive,” offered Raichura.
The Zamara Kenya Pensions Watch 2022 further shows that the median age of the Kenya population is at 20.1 years but there are 2.2 Million Kenyans aged above 60 years as of 2021 and this figure will nearly triple to 6.3 Million Kenyans aged above 60 years by 2040.
The expected increase in the aging population in Kenya presents a formidable social economic challenge for Kenya and makes it imperative for the country to put in place a broad and appropriate retirement benefits framework that will ably respond to the challenge by increasing both the quantum of savings as well as the level of coverage for savings in the formal and informal sector.
“In addition, the public and private sectors need to do their part to ensure that their employees are adequately prepared for retirement,” it reads in part.
Although Kenya’s pension fund sector is ranked the biggest in the region with over Sh1.4 trillion worth of savings invested in various asset classes, just three million out of 27.1 million in the labor force have a pension cover.
Cytonn, a real estate and investments company says despite the significant developments, the pension coverage in Kenya is still low, currently at just 20 percent.
It attributes the slow growth to factors such as market volatility, a slowdown in economic growth, unemployment, and access to pension savings before retirement.
Previous attempts have seen Hosea Kili, County Pension Fund (CPF) and Local Authorities Pensions Trust (LAPTRUST) chief executive, calling the sector regulator to consider expanding social security coverage by making pension contributions mandatory for all Kenyans if the sector is to grow beyond its potential.
The establishment of a universal fund, he said would assist by allocating a percentage of the national budget towards universal pension and medical coverage.
894 total views, 1 views today