Assets held by pension schemes hit the Sh990 billion mark by June this year helped by a wider coverage of workers, Retirement Benefits Authority chief executive Nzomo Mutuku has said.
The industry grew at a compounded rate of nine per cent between December 2016 and June 2017. It had assets under management of Sh912 billion as at December. The labour force covered by pension arrangements currently stands at about 19 per cent compared to about 15 per cent in 2010.
“Despite the increase in coverage, the figure remains too low. Too many Kenyans are not covered by pension arrangements and are not protected against long term risks such as sudden drop in income and ill-health,” Mr Mutuku said during the Zamara annual retirement conference in Mombasa.
To address the challenge of low coverage, he added that the Authority had commissioned two research projects by independent international consultants to inform the policy discourse in the area.
“The first research which is nearing completion, examines measures that can be introduced to expand coverage, strengthen administration and mobilise higher savings from schemes targeting the informal sector through leveraging technology such as the Mbao Pension Scheme,” he said.
The second research which will commence soon, he added, will examine how the Authority and other players can implement financial literacy programmes to enhance awareness on saving for retirement amongst informal sector workers.
“We recently conducted awareness campaigns on pension saving at Kisumu and Kakamega markets and the response was good. We encourage workers in the informal sector to save at least Sh20 per day for old age,” he said.
The RBA boss urged players in the industry to introduce pension schemes for informal workers in a bid to increase coverage so that Kenyans can enjoy old age.
Mr Mutuku revealed that the retirement benefits industry is grappling with unremitted contributions.
“This is becoming a concern, primarily in the public sector where a number of state corporations have been lax in remitting their contribution to their pension schemes despite having explicit budget from the National Treasury,” he added.
The RBA chief executive said some private sector schemes are also facing the challenges of unremitted contributions. He said the industry’s growth continues to be stifled by leakages that erode replacement rates.