NAIROBI, Kenya July 22 – Workers in the informal sector are being encouraged to take up pension schemes to guarantee them a better future in retirement.
Pan African Life Assurance Chief Executive Tom Gitogo said with increasing job uncertainty, investing in pension schemes was one of the avenues for cushioning financial hardships associated with joblessness.
“Gone are the days where you had job security. Retrenchment has become part of the system we live in and we believe by saving in a pension scheme you can take financial matters into your hands and predict your future,” he said.
He was speaking during the launch of an individual pension plan on Tuesday, targeting the informal sector, dubbed ‘Flexi Pension’.
Mr Gitogo said the plan was purposely designed to cater for the needs of Kenyans who don’t have a fixed monthly income. He noted that the country lacked a saving culture which he said could be addressed by getting the young generation interested in saving.
“Times have really changed and we need to entrench the culture of saving to our youth so that they can grow up knowing the value of having money to spend in future,” he added.
He said with the numerous tax incentives associated with pension funds, Kenyans of all walks of life ought to be encouraged to save money for their future.
“Just last month during the reading of the budget the Finance Minister said that you can borrow up to 60 percent of your accrued benefit of your pension as a guarantee to any financial institution which is very exciting,” he said.
The scheme offers individuals flexibility where if one is unable to make regular contributions, can stop making payments and resume once their financial status improves.
To cater to the ever changing inflation situation the policyholder can choose a five or 10 percent increase in contributions at any point in the life of their policy.
The scheme is also open to those intending to have an alternative pension scheme to boost their savings.
As an added advantage policy holders can also purchase funeral expense benefit of Sh100, 000 or Sh250, 000.
With an estimated 3.5 million people said to be in the informal sector he believes by catering to their needs, the scheme is seen as an ideal method of increasing insurance penetration to those who have not yet picked up on it.
The scheme is ideal for those in contractual or seasonal employment interested in increasing retirement savings provision.