, NAIROBI, Kenya, Aug 29 – In efforts to enhance the capacity of retirement benefit schemes in Kenya, the College of Insurance has launched the region’s first Pension Trustee Development Program (PTDP).
In collaboration with the Retirement Benefits Authority (RBA), the Association of Retirement Benefits Schemes (ARBS) and the Canadian-based Humber University, the program will train pension trustees in retirement scheme fundamentals, governance, and administration among other skills.
So far, 90 trustees from various pension schemes have been enlisted to go through the six-module training program that runs for a week.
Speaking during the launch, RBA Chief Executive Edward Odundo said the Authority now requires all trustees to be fully trained, requiring at least one member of the board of trustees in a scheme or corporate trust to be vetted by the RBA.
“You find that trustees have not gone through any certification program. Most trustees are just selected and don’t know their role. Every trustee must go through a five-day program, so that when they’re in a trustee board they can contribute effectively,” he said.
He added that since tighter retirement benefits regulations came into play, there has been a shift to preservation of funds by the RBA that operated more as a compliance regulator in the past.
“We are now moving to risk-based provision where we will be looking at schemes identify the risks and mitigate them before the scheme collapses. We also separate the scheme from the sponsor so that it is independent,” he said.
It is estimated that 17.5 million Kenyans are employed formally and informally with about 81 percent within the age group of 45 and 49.
College of Insurance CEO Ben Kajwang said in the next 15 years this cluster will form part of the retiring group which will require pensions, hence the necessity for the PTDP.
“This program is to ensure that there is prudent management so that there is enough in the fund to cover those who are retiring. There have been situations where a number of funds have run out of money because of poor decisions made by the trustees,” he said.
By developing the skill-set of local trustees, Mr Kajwang added that the program would further inspire confidence in the pension management system.
In the last decade, Kenya’s pension industry has grown almost 10 fold from Sh50 billion in 2000 to Sh451 billion in 2010.
Mr Odundo attributes the exponential growth to increased awareness of the industry’s services over the years.
However, he emphasised the need for more youths to begin considering pension plans for their future.
“The challenge has been encouraging more people to save for retirement, especially the youth. When we did our survey their financial needs were entertainment, cars and nothing on saving for retirement. The general saving culture has to change in the country,” he said.
Currently in the works, the RBA is partnering with the Kenya Institute of Education (KIE) to develop a curriculum on financial education for primary, secondary and tertiary schools equipping students with information on insurance, capital markets, pension and banking.