Pension coverage among employed Kenyans has hit 20 per cent in the year to June 2017, going up from 16.7 per cent in 2015 on the back of recruitment of more Kenyan workers to retirement savings plans.
Data from the Retirement Benefits Authority (RBA) shows that over 3.2 million Kenyans were covered under pension plans by June 2017, up from the 2.82 million Kenyan covered a year earlier.
RBA chief executive Nzomo Mutuku attributed the growth of coverage to increased financial literacy by workers on the need to save for their retirement.
There have been increased campaigns by regulators targeted at informal sector workers, which has boosted pension coverage. “The ‘Mbao Pension Plan’ targeted at informal sector that was launched in June 2011 and which allows workers to contribute as little as Sh20 for their retirement has attracted informal sector workers by making it easier for them to contribute,” said Mr Mutuku. “The Mbao membership stands at over 100,000 members with a fund value of Sh135 million as at December 2017.”
As a result of the increased coverage, assets under management by all pension schemes stood at Sh1.08 trillion last December, 18.35 per cent more than the Sh912.66 billion reported a year earlier.
Despite the growth of coverage, the RBA says there remains wide room for growth in coverage, taking into account the fact that 80 per cent of Kenyans are not covered.
Mr Mutuku noted this had exposed retirees to the risk of piling heavy social and economic burden on dependants in their old age, especially in managing their medical costs.
“To address this challenge, the law was amended requiring schemes to allow for additional voluntary contributions by a member to fund a medical fund to be accessed at retirement,” said Mr Mutuku.