advertisement

Market News

New medical fund to target retirees

Retirement Benefits Authority
Retirement Benefits Authority CEO Nzomo Mutuku. PHOTO | SALATON NJAU 

Retirees will have access to better healthcare in hospitals of their choice for chronic, pre-existing and high-risk conditions once the Post-Retirement Medical Fund (PRMF) is gazetted.

Retirement Benefits Authority (RBA) chief executive Nzomo Mutuku said the draft guidelines for PRMF have already gone through a stakeholder consultation process and subsequently approved by the Attorney-General and the Treasury. It is now awaiting gazettement.

Speaking during the launch of Liaison Group’s Suluhu Umbrella Scheme in Nairobi, Mr Mutuku said the guidelines mean the stage is now set for employers to plan for the benefits of employees.

“It also means retirees will be better prepared to comfortably meet their healthcare needs and access hospitals of their choice for chronic, pre-existing and high-risk conditions,” said Mr Mutuku.

PRMF is entrenched within a registered retirement benefits scheme or by an employer (sponsor).

Contributions are made while a member is in active employment. Medical cover benefits are met after a member has exited the service of the employer and becomes entitled to receive benefits as provided by the scheme rules.

“Just the same way a pension scheme provides assurance of an income upon retirement, the proposed PRMF will ensure provision of healthcare upon retirement,” said Mr Mutuku.

The Retirement Benefits Act was amended in 2016 to specifically provide for the establishment of the PRMF.

Thereafter, the RBA commenced a consultative process to develop guidelines to govern the PRMF. The guidelines intended to regulate and supervise the establishment and management of PRMFs, provide a guidance for schemes and post-retirement medical funds to allow members and or sponsors to make additional voluntary contributions.

In this year’s budget, the Treasury announced that the PRMF will be exempted from the retirement benefits levy in order to boost members’ contributions.

Data shows that 60 per cent of an individual’s medical costs are incurred in retirement, with the percentage of admissions for people over 65 years reported to have increased to 34 per cent in 2013 from 25 per cent a decade earlier.

Due to higher risk, older people have had to pay high premiums to get medical insurance with some service providers not offering medical cover to people aged above 65.

advertisement