Insurers Sanlam Life and Minet Kenya on Tuesday, November 3 launched a new product, RetireMed.
RetireMed is a post-retirement medical insurance cover for consumers aged 55 years and above.
It is designed to help Kenyans save for their medical expenses in retirement. Insurers hope that the product will allow consumers to make the most of their pension benefits.
RetireMed will administer both individual and group schemes, with entry ages between 18 and 59 years.
Fully regulated by the Retirement Benefits Authority (RBA), RetireMed is set up within the Minet Umbrella Pension Scheme and underwritten by Sanlam Life Insurance. As such, contributions will be eligible for applicable tax reliefs.
RBA Chief Executive Officer (CEO) Nzomo Mutuku welcomed the product, stating that it addressed challenges faced by retirees in accessing quality healthcare during their golden years.
Statistics indicate that many Kenyans underestimate the amount they will need for healthcare while planning for retirement.
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In the Association of Kenya Insurers’ (AKI) 2019 Kenya Retirement Preparedness Survey, majority of respondents admitted to feeling unprepared for retirement. Only 29% of respondents stated that they felt comfortable with their retirement plans.
Mutuku also praised the product for bringing on board workers in the informal sector.
“Additionally, the flexibility of RetireMed to accommodate any individual including the informal workers is in line with the RBA Strategic Plan 2019-2024 with a focus on of bringing more individuals in the informal sector under a retirement benefits scheme.
“It also plays a key role at a macroeconomic level in securing national savings mobilized through the pensions sector,” he stated.
To access their funds at retirement, members will have several options. Among them is using accumulated funds at retirement to purchase an annuity from an insurance company.
The annuity proceeds would then be used to make payments during the life of the member.
Alternatively, accumulated funds can be transferred into a medical drawdown fund. Payments would then be made from the fund until it is exhausted or the member passes on.
Upon retirement, members can also transfer 10 per cent of their accumulated pension benefits to RetireMed enabling them to purchase their preferred level of medical cover.
Minet Kenya Managing Director Sammy Muthui disclosed that the RetireMed fund would adopt a low risk investment strategy to protect members’ contributions.
“Contributions into the RetireMed Fund will be invested separately from the assets of the Umbrella scheme. This investment strategy will be relatively lower risk, to ensure that the contributions are not exposed to a lot of volatility in the investment markets,” he disclosed.