The Retirement Benefits Authority (RBA) has differed with Members of Parliament over early access to pension savings, saying a policy shift could sink hundreds of retrenched workers into poverty in old age.
This follows the recent decision by the Parliamentary committee on delegated legislation to overturn the National Treasury’s policy that had barred workers under the age of 55 from accessing employers’ retirement contributions.
“It is a sad moment for the retirement benefits industry as the parliamentary committee rejected our proposal to Treasury,” RBA chief executive Nzomo Mutuku said when he launched the newly reviewed Trustees Development Programme-Kenya (TDPK) in Nairobi.
Last June, pension scheme administrators welcomed the Treasury’s policy, saying it would create a pool of funds for various investments that promote public good. Workers have however been critical of the policy, citing low returns paid by scheme administrators.
The Treasury had said retrenched workers or those changing jobs would only be allowed to withdraw 100 percent of personal contribution but would be denied access to other half contributed on their behalf by the employer.
But if Parliament has its way, pension schemes will have no choice but to release the employer’s entire contribution to retrenched employees or those leaving employment.
Association of Retirement Pension Schemes Chairman Simon Nyakundi termed Parliament’s move as retrogressive saying it was harmful to employees’ wellbeing after retirement.
“Kenyans’ retirement savings are very low and hardly are Kenyan retirees able to foot the bill for their daily needs from medical, children’s education and purchase of food as well as paying rent or funding construction of a house,” said Mr Nyakundi.
TDPK curriculum is a joint project by RBA, College of Insurance and ARBS that seeks to train trustees via five-day professional programme.
Launch of the programme means incoming trustees must undertake the five-day TPDK course within six months after appointment. The course covers trustees and governance, funding and investing, contracts and sourcing, administration and oversight, retirement benefit scheme fundamentals as well as laws relating to retirement benefit schemes.