Alexander Forbes Retirement Fund has urged the Treasury to make fundamental changes to the law to make it mandatory for Kenyans to save for their retirement to enable them live comfortably during their sunset years and boost remittance.
The fund says only 22 percent of Kenyans are able to live comfortably on their pre-retirement salaries against the market recommended standard of 66 percent world over. This leaves out millions of Kenyans at the mercy of their relatives and friends who are forced to foot their medical bills and other basic needs after toiling for many years.
Speaking during the 10th annual general meeting of Alexander Forbes Retirement Fund, the Divisional Head of Umbrella & Retail Solutions at Alexander Forbes, Ms Angela Okinda, said the rate at which Kenyans were retiring and living in abject poverty was alarming and there was need for government to safeguard this population by overhauling retirement policies instead of implementing minimal changes during budget review.
Ms Okinda said Kenyans were increasingly being forced to work during their sunset years due to lack of sufficient pension remitted to enable them maintain their present lifestyle post-working. “With increasing food prices, medical costs and housing, most retirees are finding retirement to be the most difficult part of their lives”, she added.
According to studies conducted by the industry regulator, Retirement Benefits Authority (RBA) and Alexander Forbes, about 80 percent of Kenyans are not able to live comfortably on their pre-retirement salaries. The larger percentage of this population is in the informal sector which lack any form of pension plan, in an economy without a social security programme to cater for them.
They either lack information on saving for retirement which they view as another form of taxation or fear of losing their dues upon retirement.
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Ms Okinda however noted a recently completed study of the income replacement rates for the members of the Alexander Forbes Retirement Fund indicated a much higher and commendable average rate of 53 percent close to the recommended market standard of 66 percent world over.
“As fund Trustees, we are committed to a long term objective of ensuring that members are able to retire with at least 60 percent of their pre-retirement salaries through fund investment strategies such as investing in real estate with the riverine in Kitengela, commercial space in Westlands to cushion members from the country’s economic volatilities”, Ms Okinda explained.
She said the fund which now has over Ksh 23 billion in assets under management will continue to invest in projects that benefit members through innovations and offer varied investment strategies that present enormous opportunities for participating employers to exercise the appropriate strategy depending on their risk profile.
The retirement funds in Kenya have grown over the years to cross the Kshs 1 trillion mark, making them key institutional investors which could be unlocked to drive strategic and national agendas for instance finance infrastructural developments across the country.
She, however, assured the members that despite the looming hotly contested general elections slated for next month the fund will continue to drive optimal investment performance as it is not about timing the market, but time in the market.
Since its establishment in 2005, the Fund has registered strong growth in terms of both assets and members and it is now the largest multi-employer retirement Fund in East Africa, with over 150 organizations and 30,000 members.
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