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Let’s embrace saving culture for prosperity

Tuesday, March 7th, 2023 04:00 | By
Why Kenyans should inculcate a savings culture
Savings. PHOTO/Courtesy

Experts have warned that millions of Kenyan workers are at the risk of retiring into poverty because they lack social protection. The problem is compounded by a disturbing lack of a saving culture and investment among workers.

The unfortunate thing with poverty in old age is that there is little room for remedy, and productive energy has been drained. This results in high levels of dependence by pensioners on relatives, mainly children. That is why employees, their employers and the Retirement Benefits Authority must work together and nurture a saving culture to prevent penury in old age.

With the increasing high cost of living, higher taxes and low-interest rates, it is getting more difficult to save today. Experts are warning that Kenyans may be hit by a pension cyclone as the number of senior citizens without social protection is set to increase in the next two decades.

Only a million Kenyans who are earning salaries out of the million employees have pensions, and considering wage earners are almost completely locked out of any form of pension, many pensioners may not lead a dignified life. The elderly were traditionally supported by their children through the provision of food, health and security, but this is gradually disintegrating with changing family dynamics.

This has invariably exposed them to precarious situations. Amid Kenya’s poor savings culture old family ties can no longer hold which means the government should also prepare more money to take care of the old in that period otherwise they will end up destitute.

To forestall this looming crisis, it will cost the taxpayers a whopping Sh400 billion to even give the retirees a daily stipend, which is a near impossibility with our little resources. That is why we must move with speed and remedy the situation before it gets out of hand.

While the new National Social Security Fund (NSSF) Act 2013 seeks to address this challenge, it may be proactive in addressing the underlying issues, particularly inclusion.

The Act has also established a provident fund for the informal sector and increased the level of contributions and a corresponding range of benefits which include invalidity, survivors’ pension, last expense (funeral) grant and immigration benefit that was not provided in the old one. That’s why RBA must start spending sleepless nights and try to open up floodgates for new possibilities to spur the sector and afford more future senior citizens a smooth landing.

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