NAIROBI, Kenya, June 3-Fewer Kenyans are saving for retirement deepening the post-employment poverty time-bomb. A survey by Infotrack Research & Consulting shows that the number of Kenyans with a pension plan has declined to 10% as most respondents intend to rely on investments such as property to cater for their financial needs after retirement.
Releasing the survey, CPF CEO, Hosea Kili, OGW said the threat of old-age poverty is growing meaning that the majority of Kenyans will have to hustle for the rest of their lives to survive and support their lifestyles because they lacked a pension plan. “Levels of pension savings are poorest among the youngest working age groups meaning that the poverty trap will explode in the next few decades.”
Kili was speaking at Charter Hall during the commemoration of the 90th anniversary of the Local Authorities Pension Trust (Laptrust), one of Kenya’s oldest pension schemes. The study also established that there are low penetration rates for retirement benefits products, reporting an excess of 90% of Kenyans without access to individual pension plans.
Moreover, the nature of the modern workforce is changing dramatically, with far more diversity and less predictability with regards to individual career paths, family, and the form as well as timing of retirement.
Infotrak CEO, Angela Ambitho said the survey, commissioned by the County Pension Fund (CPF) – and conducted among 1500 households countrywide – demonstrated that financial literacy should start in schools while technology will make it easier to loop into the youth.
“Since pensions are based on the levels of contributions through the life course, we must innovate novel ways to reach the youth, the majority of who are not aware of pension plans and believe it is too soon to plan for retirement,” she said.
Present at the 90thanniversary celebrations was the Cabinet Secretary for Devolution and ASALs, Hon. Eugene Wamalwa who said, “It would be erroneous to think that social security is a luxury to be afforded only when growth has taken place or when countries have reached a certain level of per capita income. The time to make the change to guarantee social protection for all is now.”
Laptrust was established in 1929 and continues to service its pension obligations to those who served in the colonial and independent government. Kili admits that piecemeal changes meant to regulate retirement benefits have improved the sector but more needs to be done if the pension sector is to take its rightful place in the economy including the fact that employers are not remitting member contributions.
“We continue to grapple with the challenge of timely collection of members’ current contributions as well as historical debt. We appeal to both the National Government and County Governments to step up the efforts towards finding a final solution to the matter”.
Kili assured members that once the arrears amounting to Sh17.1 Billion of shillings are remitted, the money will be used to support the government’s Big Four Affordable Housing flagship with a focus on pensioners.
Lap trust currently has 83 sponsors who comprise the two arms of the 47 County Governments and 36 Water Companies and associated organizations.
The Laptrust scheme’s active membership stands at 20,074 while pensioners and beneficiaries currently stand at 7,098. The scheme remains in operation as a closed scheme, and therefore has not been recruiting any new members since its closure following a treasury policy directive back in June 2011.