Pension schemes uptake remains low as growth hit Ksh1.5tr
Kenya’s pension uptake remains low despite the industry growing in the last decade to hit Sh1.547 trillion, according to a report by Cytonn real estate developer. The lack of growth has resulted in the majority of employees missing out on critical income at old age where employees prefer savings with banks and Saccos.
“Despite the steady growth, we note that people continue to prefer saving using other channels like banks and Saccos,” the report adds.
To ensure employees are motivated to save ahead of retirement Cytonn CEO Edwin Dande is proposing a raft of measures for this to be achieved, among them offering retirement plans to encourage. However, if the employer has no occupational retirement scheme for the employees or does not have the capacity to start one, they can join an Umbrella Pension Schemes which reduces the average cost per member and provides an avenue to save for retirement,
Dande said employers should create awareness among employees about the ramifications of undertaking premature withdrawals from retirement accounts.
He said firms should encourage part-time employees to join retirement schemes by extending retirement plan eligibility to such groups, and the necessity of a backup plan if forced into early retirement. Dande proposed that employers should recommend to workers schemes that will offer extra benefits in terms of insurance covers and health care benefits. Such complimentary benefits would improve the quality of a retirement plan.
He also encouraged employees to create a budget and also have backup plans in case of job loss or early retirement arising from accidents or ill-health, adding that as an employee, it is essential to select a retirement plan that will not strain you in terms of contributions.
Additionally, you should look into the flexibility of the plan in terms of changing the contribution amount and measures, if any, should you miss a contribution.