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MAINGA: Good saving culture will give you peace of mind during your golden years

Saving can provide security, peace of mind, and opportunities for wealth creation.

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by Josephine Mayuya

Opinion29 March 2023 - 01:00

In Summary


  • It is in the latter working years when one realises the importance of retirement perks and more so upon retirement.
  • This, therefore, means a savings culture and more so setting up a pension fund is quite useful.

Most people will spend at least 20 years in retirement, and with the cost of living on the rise, it is crucial to have adequate savings to rely on during the golden years.

For nearly six decades, the National Social Security Fund has been a crucial component of social protection in Kenya as a contributory scheme that offers social security benefits to its members and their dependants once they hit retirement age.

However, a 2021 FinAccess Household Survey Report indicated that only 10.6 percent of households in Kenya have access to pension services, including NSSF. This means that 89.4 percent of Kenyans lack a financial nest for their retirement, which poses the risk of old-age poverty.

Furthermore, a 2021 study conducted by FG Hermes indicates that Kenya's saving rate is at 12 percent, which is way below Africa's average of 17 per cent. The country is also way behind the 30 percent target as envisaged under the Kenya Vision 2030 blueprint. With the uncertain economic conditions that keep arising, now more than ever, it is time as Kenyans we start planning for the future.

The devastating impact of Covid-19 on livelihoods brought to the fore the importance of savings and investment. Savings provide a safety net for unexpected expenses. Whether it’s a medical emergency, car repairs, or an unexpected job loss, having a savings fund gives one peace of mind knowing that there is a cushion to fall back on.

It is in the latter working years when one realises the importance of retirement perks and more so upon retirement. This, therefore, means a savings culture and more so setting up a pension fund is quite useful.

Pension funds are retirement arrangements that are designed to help individuals build a nest egg for their golden years. While it may be tempting to put off savings for retirement until later years in life, the earlier one starts, the better off one will be in their later life.

Most people will spend at least 20 years in retirement, and with the cost of living on the rise, it is crucial to have adequate savings to rely on during the golden years.

With the number of retirees growing each year, ensuring that people have sufficient financial resources in their sunset years has become an essential responsibility for individuals, governments and businesses alike. Cultivating a culture of saving requires a shift in mindset and behaviour.


The High Court ruling on the NSSF Act Number 45 of 2013 comes at a critical time as the Kenya Kwanza government looks to fulfil its social security plan. The ruling will see employers increase remittances from Sh200 to the high of Sh1,080 under a graduated scale with the upper limits on contributions expected to rise every year.

Employers are expected to remit Sh2,160 for all earners with a gross income of Sh18,000 and above, half of which is a matchup by the employer for the employee contribution.

While the ruling has elicited mixed views, both employers and employees stand to benefit when implemented. First, even though employees will see their deductions increase, they stand to be the ultimate beneficiaries of better retirement perks at maturity.

This means improved livelihoods for retirees who have had to rely on measly gratuities to keep them afloat. It will allow individuals to plan for the future, achieve their financial goals, and build a safety net for unforeseen circumstances.

Secondly, organisations stand to benefit from a motivated workforce whether through NSSF contributions or a private pension plan. These contributions from employers demonstrate their commitment to their employees' long-term financial security.

A company that offers a pension plan shows that it values its employees and recognises the importance of supporting them beyond their working years. This not only boosts employee morale but also enhances the company's reputation as a responsible employer, making it an attractive place to work.

Thirdly, the ruling presents an opportunity for the government and private pension schemes to conduct financial literacy programmes to instil the savings culture in both the formal and informal sectors.

The informal sector makes up a significant portion of Kenya’s economy, and its workers often face unique challenges when it comes to saving and planning for the future. Therefore, it is crucial to offer financial education programmes that teach workers about budgeting, savings and investment strategies.

As we implement the NSSF Act 2013, it's important to mention that it would have been great if Kenyans were given the opportunity to make a choice on the fund they wished to contribute to, especially for those who already have private occupational pension funds.

The idea of applying to contract out of Tier II could have been expunged and instead allowed employers who have registered pension funds that are active to automatically get exempted from the process of contracting out of Tier II.

Other issues that have arisen include employers running gratuity arrangements and budgets. Accordingly, a window period for implementation should have been considered for sensitisation purposes and budget adjustments.

In the wise words of Benjamin Franklin, a penny saved is a penny earned. The culture of saving is critical for individuals and society's long-term financial health. Saving can provide security, peace of mind, and opportunities for wealth creation.

All in all, there is need to dialogue and educate the public on the benefits of saving through registered pension funds and how these funds benefit Kenyans in both the formal and informal sectors, for our country to fully reap its benefits. By promoting a culture of saving, we can ensure a brighter financial future for ourselves and future generations.

General manager, Life & Pensions Division at Minet Kenya


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