Pension payments poised to soar in 2022
Pension payments are expected to accelerate and exceed last year’s record spending in the year to June 2021, based on industry projections.
The industry spent Sh110.27 billion for the whole year to June 30, up from Sh86.99 billion recorded a year earlier, in what was the fastest annual growth in four years since June 2018.
Experts believe 2022 could surpass last year’s spending as more public servants continue to exit the service in what has been a consistent trend in the last four years.
“We are looking forward to a ramp up in spending, political stability as well as a stable macroeconomic environment. Even though downside risks could emanate from a slowdown in global growth such as the current global inflationary pressures, the pension industry is primed to capitalise on the gains amid a changing environment and growth in member contributions,” said the Chief executive of County Pension Fund (CPF) Hosea Kili.
He was speaking Tuesday when CPF Group was feted top of the medium taxpayers’ category in Kenya by the Kenya Revenue Authority (KRA).
He said Kenya’s pensions sector which had $12.97 billion in assets under management as of June 2021, could do well this year despite the upcoming August 2022 general elections.
Pension schemes will play a key role in unlocking financial sources of cash for public infrastructural projects such as roads.
Industry figures show that the Kenyan pension fund sector is the biggest in the region with over Sh1.4 trillion worth of savings invested in various asset classes but lack of diversification among trustees and lack of retirement security plans among Kenyans have seen the sector record enough growth despite its potential.
Pension spending is all cash expenditures on old-age and survivors pensions.