Market News

Pension players told to woo young savers with technology

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Summary

  • Kenyan pension firms have been urged to leverage technology to attract a new generation of savers and boost penetration.
  • Pension firms have been trying to bring on board young savers against the increasing tide of consumerism that has left many people exposed to economic shocks such as during the Covid-19 pandemic due to a lack of savings.

Kenyan pension firms have been urged to leverage technology to attract a new generation of savers and boost penetration.

Pension firms have been trying to bring on board young savers against the increasing tide of consumerism that has left many people exposed to economic shocks such as during the Covid-19 pandemic due to a lack of savings.

“Driven by subdued economic growth, nations have been hit by an urgent need to tackle socio-economic deficits — a realisation that we require new models of engagement that will enable us to leapfrog to the next phase of growth,” said Liaison Group managing director Tom Mulwa.

“The changing social demographics globally and the disruptive change caused by Covid-19 will most likely affect investment returns and in turn, push pension investing to modernise and embrace new technologies, markets and processes.”

He touted the technology as a tool to enable the country to grow its pension penetration, which currently is at 20 percent.

This comes when the pension industry is under pressure from lower contributions due to job losses caused by the Covid-19. The Retirement Benefits Authority data showed that assets under management grew by 7.7 percent to Sh1.39 trillion in 2020, the slowest since 2015 when retirement benefits increased by 3.3 percent.

Earlier, fund administrator Zamara CEO Sundeep Raichura said there is an urgent need to extend pension coverage to the informal sector, which comprises 85 percent of Kenya’s workforce. “An informal sector worker has as much if not higher need than their formal sector counterpart to provide for or be protected against the loss of income earning capacity in old age,” he said in Mombasa.