Over 82pc of retirees back to work amid high inflation


Pension coverage has grown to about 22 percent of the labour force from 12 percent in the year 2000. PHOTO | POOL

More than 82 percent of senior citizens are working for basic needs amid financial struggles, raising concerns about the adequacy of pension payouts and coverage of retirement benefits.

The Kenya National Bureau of Statistics (KNBS) quarterly jobs report shows that 776,159 of 869,338 people above the age of 60 were in active employment in December, representing 82.1 percent of the senior citizens in the country.

Many of those working were doing so to meet basic needs. Another 6,881 persons above the age of 60 joined young graduates in actively looking for jobs, says the KNBS survey.

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 fast changing.

Workers above 60 years, Kenya’s contractual retirement age, have increased by 7.7 percent or 55, 149 between March and December.

Analysts say the relatively 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.

This has been worsened by the fact that retirees are living longer on the back of improved healthcare and most prefer to reside in urban centres, a departure from past trends where the aged would retire to villages and smaller towns where life is less costly.

The Association of Kenya Insurers (AKI) Chief Executive Officer Tom Gichuhi says increased life expectancy on improved healthcare means many people are turning 60 years while still energetic and willing to continue working in line with the trends being witnessed globally.

He, however, adds that while old age working in countries such as Estonia, Sweden, Canada, and Japan is mainly motivated by labour shortage, the Kenyan case is usually due to meagre or no retirement savings.

“Many people are retiring and asking their employers for some extension while others go looking for other jobs since they feel inadequately financially prepared to face retirement. This speaks to the deficiency in savings,” said Mr Gichuhi.

“But there are other factors making people hang onto to work including the need to run their own businesses as opposed to a deficiency in savings.

They just want to be actively engaged, out of a habit formed over time.” Payout of retirement benefits in a lump sum instead of in monthly installments forces many retirees to go into business or seek employment after spending their windfall.

Pension experts reckon that well-run retirement benefit schemes have the ability to compensate retirees an equivalent of 30 percent of their incomes.

Inflationary pressures are forcing retirees to seek work, in particular part-time jobs, to cover the costs of food and medicine.

Kenya’s inflation has since June breached the target range of 2.5-7.5 percent, prompting the Monetary Policy Committee (MPC) to raise benchmark interest rates to curb consumer spending.

Despite increasing the benchmark lending rate three times since September, inflation has remained outside the preferred government range since June last year.

Costly food and fuel due to the worst drought in 40 years and Russia’s invasion of Ukraine pushed inflation from 7.1 percent in May to 9.2 percent last month.

The financial insecurity that inflation has caused this year has forced many older adults to make difficult decisions, analysts say, adding that many people are delaying retirement.

A 2019 Research Plus Africa findings said 79 percent of Kenyans want to start a business after retirement while 19 percent do not plan to retire at all since they have inadequate savings.

About 39 percent of respondents said they viewed their children as the retirement package while 61 percent said they were not earning enough income to allow them to save for old age.

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

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

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 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.

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