The Zamara study shows that only 4% of the retirement fund members analysed made voluntary contributions over and above the stipulated levels. Pic: Photo Courtesy
Majority of Kenyans to retire into poverty, new study warns
Kenya is on the verge of a retirement crisis despite having legislation that has improved the governance and operations of pension funds, according to a new study by Zamara Group, which says it has done little to improve the coverage and adequacy of benefits in the country.
For many years coverage of retirement schemes in Kenya has remained relatively low with less than 50% of the formal sector covered and coverage of the much larger informal sector virtually non-existent.
While announcing the survey, Zamara Group Chief Executive Officer Sundeep Raichura said that even those who are saving under the retirement schemes, their investments were grossly insufficient to provide an adequate income during sunset years.
The study which covered 65,000 retirement scheme members spread across more than 200 retirement funds in the country showed that the retirement savings of Kenyans are able to support a replacement of only 34% of their last earnings in retirement compared to the desired target of 75% to enable individuals to maintain the same standard of living in retirement.
Raichura said that the findings were quite significant and worrying in that even the few Kenyans lucky enough to belong to a retirement scheme were sleepwalking to disaster and not even aware of it. He called for urgent intervention by Government, regulators, employers and the pension industry to take stock of the situation and come up with policy reforms and measures that improves the outcomes of members of retirement funds. “Simply put, we need to see more money into retirement savings, get better value out of those savings and have a collective financial literacy drive” he added.