Pension funds in Kenya are not attracting enough savers from both the formal and informal sector because of low penetration, experts say.
A publication of the Zamara Kenya Pensions Watch 2022, shows coverage of the current pension in Kenya is at around 17.7 per cent of the total employed population.
About 83.2 per cent of employed Kenyans in the informal sector have no access to any form of pension savings.
Speaking at a Pension Trustee Seminar, organised by Zamara, former education CS George Magoha said improving the retirement benefits framework will help widen coverage across the working population.
It will increase penetration in the expansive informal sector that remains excluded from saving for retirement.
“There is need to increase the levels of savings in both private sector and public sector retirement benefit arrangements, to ensure that those covered receive an adequate benefit that will cover their basic needs when they retire,” he said.
Zamara Group CEO Sundeep Raichura said the provision of retirement benefits is limited to the public sector workers, and the private sector is slow in rolling out such benefits.
The informal sector has completely been left out, he notes.
"The provision of retirement benefits should be a universal basic need and there is need for further enhancement and improvement of the retirement benefits framework in Kenya to make it more inclusive,” Raichura said.
The Zamara Kenya Pensions Watch 2022 shows that the median age of the Kenya population is at 20.1 years, but there are 2.2 million Kenyans aged above 60 years as of 2021.
This figure is expected to nearly triple to 6.3 million Kenyans aged above 60 years by 2040.
The expected increase in the ageing population presents a formidable social economic challenge for Kenya, and makes it imperative for the country to put in place a broad and appropriate retirement benefits framework.
President William Ruto has been concerned about the country's saving culture as his government plans to increase National Social Security Fund (NSSF) from the Sh200 flat rate to six per cent of workers’ monthly salaries.
Kenyans save the least in East Africa and the saving rate is below the continent's average, an analysis by EFG Hermes shows.
According to the report looking at different investment options in the country, Kenya's saving rate is at 12 per cent, way below Africa's average of 17 per cent.
The pension trustee seminar seeks to lay ground in understanding how each industry player can help the member retire better.
Themed "Putting the Member in Focus", the conference will see the industry players dig into trends and insights on pension adequacy, investment, contributions, and share the progress of the industry in Kenya.
The forum also provides a platform for experts as well as major industry players to network, share experiences on the emerging trends and happenings within the insurance sector.