County pensions administrator CPF has moved to insulate itself against competition by launching a Shariah-compliant pensions product, Salih, aimed at its 6,000-strong Muslim base.
CPF chief executive Hosea Kili said the members, mainly drawn from 10 counties, can now freely apply to transfer their savings from conventional schemes to Salih.
The new product conforms to the Islamic law and has since been approved by Islamic scholars who will also supervise Salih funds investments, Mr Kili said.
“We have 10 counties that are predominantly Muslim and some of them had shunned our products or were grudgingly members of our pensions’ scheme.
"Now we expect to attract even other members of the society via USSD *289# for as little as Sh50 and a minimum of Sh500 a month thereby ensuring our Muslim brothers and sisters also save for retirement,” said Mr Kili.
National Assembly Majority Leader Aden Duale supported the new product saying Muslim leaders at all levels will drum up support for its uptake to enhance financial independence in old age.
Mr Duale added that integrity in management of the fund will be of utmost importance.
“To boost its recognition, parliament is soon debating a Retirement Savings Bill that will recognise Shariah-compliant products as well as make saving for retirement mandatory for all Kenyans.
"Salih is well-grounded since it involved Islamic scholars who will play a key role in deciding how the funds will be spent,” he said.
Retirement Benefits Authority chief executive Nzomo Mutuku welcomed the new product, saying it will boost access to cheap funds for local developments as well as drive uptake of pension products that currently stand at 20 per cent.
CPF oversees three funds, County Pensions Fund currently with 6,500 members who have saved Sh6.2 billion, LapTrust with Sh28 billion from its 28,600 members that is still owed Sh10 billion by county governments for non-remittances and the Individual Pensions Plan boasting of 10,000 active members who have saved up to Sh780 million.
Mr Mutuku said introduction of products that reflect the needs of society will attract more members, enabling Kenya to grow pension uptake that boasts of assets valued at Sh1.2 trillion.