Zamara pushes for tax cuts to boost pension funds

Zamara Fanaka Retirement Fund (ZFRF) has asked the government to provide tax incentives for funds held by pension firms to enhance the growth of the sector.  

Fund chair Lucy Kambuni said this would help the trustees diversify the asset base, which would, in the long run, improve the returns for retirees as a many Kenyans grapple with the high cost of living on retirement.

“Kenyans retiring at age 55 and above today are living on about 22 per cent of their pre-retirement salaries against the market recommended standard of 66 per cent,” she said.

“Significant changes to the law (will) encourage many Kenyans to save for their retirement.”

Zamara executive director James Olubayi said the law capping the tax allowable retirement contribution at Sh20,000 has remained unchanged for over two decades and there was a need to review it.

“The rate at which many Kenyans are retiring and thereafter live in abject poverty is worrying and the government ought to safeguard this population by entirely overhauling retirement policies to grow the industry instead of piecemeal reforms that are normally effected during budget review,” said Mr Olubayi.

READ: Jobs, pensions crisis as 37pc of civil servants set to retire

According to Zamara divisional head of umbrella and retail solutions Angela Okinda, it may be difficult for Kenyan millennials to retire in the wake of more needs other than saving for retirement.

“With current unemployment rates at a high of 39.1 per cent, there is almost no disposable income to set aside for retirement saving,” she said.

More than 12 million working Kenyans are not enrolled in any formal pension plan while about 10 million who are unemployed may not be saving for their retirement.

Zamara Fanaka Retirement Fund established in 2005 has over Sh23 billion in assets. Retirement funds in Kenya hold about Sh1 trillion in assets.