Pension scheme coverage worrying

November 27, 2008
Shares

, NAIROBI, November 26 – The coverage of pension schemes amongst the working population, both in the formal and informal sector is currently very low, according to an industry player.

British-American Assets Managers Managing Director Dominic Kiarie said on Wednesday that statistics show that out of an estimated population of two million in the formal sector, only 16 percent or about 300,000 were covered through formal pension arrangements.

“Therefore the gap in coverage in the formal sector’s working population is 84 percent or 1.7 million people and in the informal sector.  Anecdotal evidence suggests that 80 to 85 percent of the estimated working population, about five to six million people do not have a formal pension arrangement,” Mr Kiarie said in Nairobi.

Mr Kiarie revealed that the lack of flexible pension arrangements or structures; lack of cost effective measures for small employers and lack of awareness are some of the impediments that had been experienced in the past in coming up with solutions for the Small Medium Enterprises Sector.

He explained that the British-American Managed Retirement Fund (MRF) was a pooled investment fund with a flexible investment strategy aligned to the investment requirements of the Retirement Benefits Act.

Mr Kiarie said that employers without pension schemes can now easily access a ready-made pension scheme through the British-American Umbrella Retirement Benefits Fund.

“The scheme has a corporate trustee, a custodian and the funds are invested through the MRF.  This provides participating employers with a ready-made scheme which is fully compliant with all requirements of the Retirement Benefits Act,” Mr Kiarie said.

Mr Kiarie also disclosed that benefits of members may be transferred to the scheme where an employee changes jobs or the benefit may be preserved in the scheme until the employee attains mandatory retirement age to access the employer’s contribution. The employers’ contribution to the fund he said is tax deductible as provided for in the tax legislation.

“Traditional view of retirement funds or access to pension funds has been that retirement funds are for large employers only. The solution from British-American will ensure smaller companies are able to offer attractive retirement packages for their employees,” said Mr. Kiarie.

He said the British-American Managed Retirement Fund was designed to generate strong investment performance due to its flexible investment strategy, and to consistently perform in the top bracket of performance by retirement benefits funds.

He announced that the investment product would be distributed through the company’s network of financial advisors countrywide.

Shares

Latest Articles

Stock Market

Most Viewed