The study dubbed Kenya’s first deposit administration survey shows over 40 percent of Kenyans will not afford to retire and will have to rely on family support when they retire.
According to the survey, the highest return declared over the last 10 years by an insurance company was 18 percent in 2006. The lowest return was three percent in 2011.
The annualised average returns for the last 10 years have been between 7.8 percent per annum and 12 percent per annum.
Alexander Forbes Kenya CEO Sundeep Raichura attributes the fluctuating returns to volatility of the investment markets.
“The main factors affecting returns declared include investment strategy, and asset mix of investment portfolio prevailing market conditions and outlook. Reserve policy, expense and profit margins as well as rates declared by others in the market,” Raichura said.
Alexander Forbes Resident Actuary Shurti Shah says one of the challenges faced by the retirement benefits industry is the ability of the members to access portions of benefit as cash on withdrawals.
“These leakages mean the funds available at retirement are not sufficient, in addition the current tax free limit Sh20, 000 per member per month needs to be reviewed to encourage members to save more,” Shah said.
The survey is aimed at educating relevant stakeholders so as they are better placed in when making important investment choices.