Connect with us

Hi, what are you looking for?

Capital Business
Capital Business
This is according to data submitted by Kenya National Bureau of Statistics in the 2015/2016 Kenya Integrated Household Budget Survey/FILE

Finance

Low pension uptake among informal sector sending millions to poverty in old age – expert

A survey conducted by Emwealth, a local financial services provider, 55 per cent of workers under the informal sector fail to save in a pension scheme/FILE

NAIROBI, Kenya, July 4 – The uptake of pension among workers in the informal sector remains low what pension specialists have attributed to an acute shortfall in existing social protection policies.

According to Emwealth Pension Manager Bancy Kaleli, a majority of workers in the informal sector fail to honour monthly pension contributions due to lack of understanding on the need to save for retirement, exposing millions of citizens to poverty in old age.

A survey conducted by Emwealth, a local financial services provider, 55 per cent of workers under the informal sector fail to save in a pension scheme.

“Majority of workers under the informal sector, lack knowledge of what pension is and why is it important when retiring and as a country we also lack capacity in government and private sector as well,” the pension expert says.

This, according to Kaleli, contributes to the old generation depending on their young family members who are struggling to make ends meet.

“The first risk that one attracts due to lack of saving is poverty and it’s very unfortunate to have people at that age being unable to cater for their day to day needs then you become a burden to your children and the society,” she adds.

Kaleli recommends the adoption of latest solutions such as mobile pension products which will address the needs of informal workers through catering for their present financial needs and allow members to plan for a comfortable retirement.

In May the Retirements Benefits Authority (RBA) rolled out a new savings product that would help create a pension pool for the informal sector after the Mbao Pension Plan stalled.

Under the plan, informal sector workers could save Sh20 daily for retirement.

RBA Chief Executive Officer Nzomo Mutuku mentioned that the product had a broader offering compared to just savings that would boost the informal sector players to borrow against what they have set aside for retirement.

Advertisement. Scroll to continue reading.

“We want to have a single package that even includes a funeral package that we think would attract the informal sector, which is the biggest employer,” he commented during the launch of RBA’s 2019-2024 Strategic Plan in May.

Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...