, NAIROBI, Kenya Jun 26 – The government is encouraging more Kenyans to retain their savings in pension plans.
Vision 2030 Delivery Secretariat Director General Mugo Kibati said in this bid, the government has made annuity payments tax free for retirees aged 65 and above.
“This will go a long way in avoiding risky investment that leave some outliving their wealth and becoming broke in old age,” he said.
In 2007, the government excluded pensioners aged 65 and above from taxation on their pensions. In 2008, individuals aged 65 and above were further excluded from taxation of their lump sum retirement benefits.
“For many years the country has lacked the contribution of senior citizens in development because majorities do not have the financial means to participate in economic ventures once they exhaust retirement benefits,” Kibati said.
He said that annuity plans should be made more attractive to retirees to help increase their participation in economic development and reduce poverty levels in the society.
“Through these annuities our senior citizens will be empowered to contribute to economic development throughout their lives,” he said.
Kibati was speaking at the launch of an annuity plan to provide retirees with a steady lifetime income by CIC Life Insurance, a subsidiary of CIC Insurance Group.
The product will benefit retirees more from regular monthly annuity payouts than lump sum payments made by provident funds on retirement.
The plan offers competitive regular month payout and a free last expense cover of Sh100,000 payable in the event of the death of a principal member.
Minimum purchase price has been set at Sh400,000 to enable an annuitant to get a considerable regular monthly payout while the minimum entry age is 50.
The company is projecting to manage annuity funds in excess of Sh2 billion.