Over 80pc of retirees ‘working to meet basic needs’

More than 80 percent of senior citizens work for basic items, raising questions about adequacy of pension payouts and coverage of retirement benefits.

The Kenya National Bureau of Statistics (KNBS) quarterly jobs report shows that 708,902 of 869,338 persons above the age of 60 were in active employment in December, representing 81.5 percent of the senior citizens in the country.

Many of those working were doing so to meet basic needs. Another 40,296 persons above the age 50 were actively looking for jobs.

This points to a possible deepening of old age poverty, which in itself has significant social implications in a country where the traditional patterns of the young caring for the old are changing.

Analysts point out that the relative low number of Kenyans saving for pension and the value of payouts at retirement have compelled many retirees or those approaching the legal retirement age of 60 to continue working.

“Out of the 65,000 pensioners we surveyed we found that on average their pension was 34 percent of their incomes instead of the 75 to 80 per cent target, so if you were earning Sh100,000 you are now getting Sh34,000, which may explain why you have to work,” said Sandeep Raichura, CEO of Zamara Group — a pension management company.

According to him, payout of retirement benefits in a lump sum instead of in monthly instalments forces many retirees to go into business or seek employment after spending their windfall.

“The biggest challenge is that most of our schemes are provident funds, where they give you a lump sum and that is it. Most people cannot handle this and they squander and misuse the money and in three years they have to come back and work,” he said.

Kenya also suffers from a low pension coverage with more than 70 per cent of Kenyans retiring without a pension, save for the less than sufficient payout from the State-backed National Social Security Fund (NSSF).

The NSSF’s monthly contributions stand at Sh400 and the fund on average pay outs less than Sh250,000 when a member retires.

“This can translate to Sh5,000 a year for 30 years,” Mr Raichura said in reference to NSSF payouts. “Even if you have the best fund manager who triples it, you will get Sh450,000 in today’s money. You simply can’t retire with that.”

Kenyans on average are living longer and the rank of the elderly poor is rising as the traditional social fabric yields to the forces of rapid urbanisation and changing social and filial trends. In the past, social security was not a bother to many Kenyans because there was a large extended family to fall back on in the rural areas, but as the social fabric changes and more people opt to retire in urban centres, the trend is increasingly becoming a headache to policymakers. This is what prompted the State to start sending a monthly stipend of Sh2,000 to those above 70 years to cushion them from old-age poverty.