Last month started off with a global celebration — the International Day for Older Persons. It is marked annually across the world, ostensibly to draw attention to the challenges and negative misconceptions about older people and the process of ageing.
While here is Kenya a number of events bringing together older people took place to highlight their plight, this particular day brought home the harsh reality of life for ageing people.
Leading a normal life becomes harder, the older one gets. In addition to maintaining the lifestyle one was used to in younger, stronger working years, there are also the health issues to contend with.
The good thing is that as a nation, we have already recognised that this aspect of having a larger aging population is a growing problem, and we need to address it both a policy level for those who are already elderly and at an individual level for the younger Kenyans who need to prepare better for this eventuality.
In traditional African societies, elders are revered and are usually cared for by their grown children into old age. But as the quality of life in Kenya improves, more people are living longer. The country currently has 1.2 million people above the age of 60.
The number is expected to reach 2.2 million in the next 10 years, according to the latest government population figures. Modern Kenyans are beginning to place ageing parents in the care of a growing number of retirement homes, something that was unheard of a generation ago.
Clearly, things are changing and the traditional model where children and the extended family members took care of their elderly relatives is fading fast.
This means that increasingly, the responsibility for the older people’s lives will increasingly rest in their own hands.
In any case, even if the older people are taken to live in a home for the elderly, someone will still needs to foot the bills. A few commercial retirement homes have sprung up in Kenya in recent years, but most are run by charities.
The Nyumba ya Wazee (Kiswhaili for ‘house of the old people’), based in Nairobi, is run by the Little Sisters of the Poor, a Catholic organisation that survives on donations.
Granted, the Kenya government has moved to try and alleviate the challenges facing vulnerable populations, through the Older Persons Cash Transfer programme that started in 2007.
It was designed to provide regular and predictable cash transfer to poor and vulnerable older persons (65 years and above) in identified deserving households and currently is estimated to cover 203,011 households countrywide. In this system, the government delivers Sh2,000 per household per month every two months through appointed payment agents.
We all know how much this amount of money can purchase in today’s economy. Even in the rural villages, Sh1,000 is insufficient to sustain a person in one month.
Clearly, the premise here is that even the people benefiting from this government assistance need to complement the income with another source.
And as more people move into the age bracket that requires government assistance, it will become an even bigger burden for Kenyan tax payers. Already, they are forking out Sh2 billion annually for this support programme.
There is only one solution to this emerging and growing problem: get working Kenyans to start saving early for life after their productive years.
While there is already some incentives to make this possible, through tax incentives on retirement savings with registered pension schemes, it is clear that there needs to be a coherent policy and coordinated effort by financial sector players and regulators to tackle the problem of low retirement savings in Kenya.
It is partly an attitude issue, as you quickly realise when speaking to a group of young people in their 20s and 30s.
Some of them have not even contemplated the eventuality of ageing. But we can also attribute the low level of retirement savings to the way it has been packaged for communication and awareness.
Some industry players opine that possibly we should call this king of saving something else, such as in the United States where the employer sponsored scheme is known as 401k.
Local pension sector players, including the regulator have been for the past few years trying to encourage Kenyans to put aside some funds for retirement.
It is widely recognised that the bigger portion of the target population for this critical practice lays within the SME firms. It is estimated that the nearly half a million small-scale enterprises employ about five million Kenyans.
Their staff range from one to five employees though there are many that have slightly larger staff complement (such as service stations, restaurants, farms and farms).
The biggest challenge that many of these employees face with the nature of their jobs is stability of employment. Yet even then, what we have with this productive population is a sense of immediacy.
The number of issues they feel their limited funds need to address including taking care of their children school fees are myriad.
The younger generation doesn’t see retirement as a priority, thinking first about things like repaying the university loan, buying a car and generally financing the present.
This mentality puts them at a disadvantage, however. It is especially important for young people to realise the money they put away for retirement in their 20s, and by the time they get to retirement age, that number is going to be huge compared to, say, waiting until they’re 30.
Still they will be ‘hustling’, as the working population is wont to say, while hurtling into their older years without a consideration for their life in those sunset days.
So what to do now? The good news is that this is not a uniquely Kenyan problem and some of countries are already proposing additional ways to compel younger people to save for retirement.
These suggestions range from literally ‘forcing’ people to save in workplace retirement plans through automatic enrolment, instituting a nationwide financial literacy curriculum starting in high school to rolling out a strategic government PR campaign.
Whichever direction chosen, the international day for older persons serves as a start reminder to the immense effort still needed by individual pension firms, the industry regulator and other financial sector stakeholders to make Kenyans save for their old age.
The writer is the managing director of CIC Life Assurance.