Everyone needs a pension plan

Godwin is passionate about the pension industry. For the last 11 years, he has worked for different organisations in the financial sector. He was 31 when he was appointed managing director, Octagon Pension Services, in 2017. He tells us why you should have a pension plan irrespective of your employment status.

Why is it important for young people to have a pension plan?

Millennials who start working at 25 years for instance, assume that they will have 35 years to work and figure out their financial future. For them, saving for pension is not a priority.

In reality though, saving for your retirement should start the moment you start working. How shrewdly you manage your first check determines the kind of life you will live 20 or 30 years after your retirement.

Statistics from the National Bureau of Statistics show that 52 percent of elderly people in Kenya are living in poverty, even after working for half their lives. The government has to take care of them through cash transfers, which is expensive.

Are retirement benefits attractive enough?

In Kenya, the returns on benefits are at an average of 10 percent, higher than the global average of six percent. Pension funds are invested by banks for returns. There is a good case for people to save for their retirement. We only need to put up the relevant support structures and to boost people’s confidence.

You were a manager at 26, what was the experience like for you?

When I was put in charge of a team, it was overwhelming at first. I had to learn fast by acquiring emotional intelligence as soon as possible. By bettering myself every day, I was able to supervise my team and advise our clients. This position also set me on the path of my future career exploits.

The role also taught me that organisations’ strategies and overall objectives must align with the customers’ needs by creating a memorable customer experience.

Tell us a little bit about your company.

As a subsidiary of Octagon Africa, our focus is on pension administration, pension consultancy, insurance brokerage and property management. I head the pension advisory services at Octagon.

In this role, I am in charge of enrolling people in pension services and managing their pension and retirement needs. I am also involved in capacity building for our clients and other professionals in the market, to train them and nurture their understanding of how pension works.

How would you describe the pension industry in Kenya?

Only three percent of Kenyans are covered by pension, both in formal and informal sectors of the economy. Out of the 16 million working Kenyans, 83 per cent of these (13.3 million) are in the informal sector. Sixty percent of these are young people between 18 and 35 years.

Seventy-five percent of Kenyans in the formal sector are covered by the National Social Security Fund (NSSF). The rest are in occupational schemes. But even those within the pension sphere are not secure about their retirement.

What specifically needs to be done to get more Kenyans within the pension bracket?

More efforts need to go toward sensitising individuals and corporates to enrol employees for pension schemes as soon as they join employment. Those in the informal sector too need to set something aside.

It is embarrassing to work for so long only to suffer in your old age. Governance of retirement benefit schemes has so far been ineffective. This situation must be corrected to reassure members that their savings are safe and well managed.

Are there pension plans for unemployed people?

Different pension products exist for different demographics, including people without a fixed income. Contribution here is based on their ability to save, unlike those in formal employment who have predetermined rates. Members can contribute as little as Sh500 whenever they can, using mobile money, which is convenient.

You have had stints at different organisations. What are you most proud of from these experiences?

I worked for a fund management company before I went into pension administration. I later joined the insurance industry, working for the Insurance Company of East Africa. I always look at growth as the ability to contribute to self, the people I work with and the society through commitment, strategy and passion.

Any professional/entrepreneurship advice that did not work for you?

Investment in the infamous quail business, which had promised quick returns, turned to be a big flop. Over time though, I have learnt to embrace professional advice, advice that has been tested and proved to work.

The information must also be founded on research. I now also value mentorship and the need to be patient while undertaking any investment.

What opportunities exist in the pension industry?

The pension industry brings different professionals aboard at different levels. There are fund managers who invest members’ money to generate a return. Pension administrators ensure that the governance and administrative aspects of pension schemes are running well.

Banks act as custodians of money and assets of the pension schemes. Others are actuaries who do statistical analysis of modelling for pension funds. There are also lawyers who do pension advisories.

For those who wish to venture into the world of pension full time, the Institute of Pension Management at Octagon is now building capacity in this area.

Have you been able to attain a work-life balance?

Balancing the two was a big challenge when I started out. Work took most of my time and I had to sacrifice a lot to keep going. Over time, I have managed to navigate my professional and social life with considerable ease. I am not there yet, but I always create time for myself. It helps to take a break from work and reinvigorate, after all, what is the worst that could happen?

Take-homes for a young professional reading this?

It matters more than your competencies to make a mark in any competitive industry. You must possess intrinsic values such as passion as a requisite for growth.

Have a clear understanding of your subject area, how the industry works and opportunities for growth. You must also be able to predict situations and to prescribe solutions in different scenarios.