Planning for your retirement starts on the day you get employed. Whereas this is ideal, the reality is that most individuals hold off retirement planning until in their 40s or even 50s.
We often see retirement confidence revealed in the media. We have had judges, teachers, executives in State agencies and numerous professionals contesting to have their contracts extended to surpass the recommended retirement age.
Therefore, the big question remains, who is to blame for the lack of preparedness? Is it a result of ignorance on the part of the individual or the human resource (HR) function?
Whereas retirement planning is ultimately an individual responsibility, studies show that setting employees’ minds at rest about their retirement will make them more productive, loyal and committed. Employees leave the organisation feeling that their worth was recognised at every stage of their career.
Therefore, involvement by both the individual and HR offers a win-win solution for both parties.
This goes against the widely accepted practice where learning and development initiatives undertaken by the HR centre around transferring technical or soft skills that are geared towards closing employees’ competency gaps.
Retirement planning training is often undertaken as an afterthought or when employees have less than five years to retirement giving them very little time to change mindset, behaviour and save for their financial needs in retirement.
Based on recent research findings from a study carried out by Enwealth Financial Services in partnership with Strathmore University and the Institute of Human Resource Management, only one in seven Kenyans (14 per cent) are ‘very confident’ that they will outlive their retirement savings.
Also interestingly, positive saving behaviours such as having an emergency fund, maintaining a bank account or paying up credit when due do not impact an individual’s retirement confidence — this further shows the need for financial management programmes that go further than helping individuals budget, get out of debt or come up with a plan.
The sensitisation should provide insights into much more critical retirement issues like estate planning, age-based investment, the nomination of beneficiaries, income replacement rations and compounding effect, among.
The training has to go beyond the textbook action of estimating retirement needs but focus on holistic investment advice that takes to account retirement planning for individuals and their spouses and portfolio building. It’s only through taking this approach that we will enable members to make informed investment decisions.
Additionally, HR practitioners need to take advantage of information technology not only as an enabler of operational efficiency but also as a platform for innovative financial literacy and member communication.
As we cross over to the new year 2019 and get a year closer to retirement, let us all take a critical evaluation of how well prepared we are for this certain transition.
Moreover, the HR functions should seek to support the 86 per cent of employed Kenyans who lack confidence in their retirement preparedness. After all, it’s good for business.