Connect with us

Business News

Zamara calls for tax reforms to boost pension growth

Fund’s chair Lucy Kambuni says Kenyans retiring at age 55 and above today are living on about 22% of their pre-retirement salaries against the market recommended standard of 66%



Zamara Executive Director James Olubayi .

Zamara Fanaka Retirement Fund-the largest retirement umbrella fund by assets in Kenya has called on the government to consider introducing tax incentives on funds held by pension firms as part of the key reforms required to enhance the growth of the sector.

Addressing stakeholders during a breakfast meeting, Zamara Fanaka Retirement Fund chair Lucy Kambuni said: “this would help the trustees in diversifying the asset base of funds, which would in the long run improve the returns for retirees at a time when many Kenyans were grappling with the high cost of living upon retirement.”

“Kenyans retiring at age 55 and above today are living on about 22 percent of their pre-retirement salaries against the market recommended standard of 66 percent,” she added.

Kambuni called on the government to initiate some significant changes to the law to encourage many Kenyans to save for their retirement.

Zamara Executive Director James Olubayi said the law capping the tax allowable retirement contribution at Ksh 20,000 has remained unchanged for over two decades and there was urgent need to review it to improve the returns for retirees.

“The rate at which many Kenyans are retiring and thereafter live in abject poverty is worrying and the government ought to safeguard this population by entirely overhauling retirement policies to grow the industry instead of piecemeal reforms that are normally effected during budget review,” Olubayi urged.

Zamara Divisional Head of Umbrella & Retail Solutions Angela Okinda said it may be difficult for Kenyan millennials to retire as for them; there are far more important competing needs than saving for retirement.

“With current unemployment rates at a high of 39.1%, there is almost no disposable income to set aside for retirement saving,” she added.

More than 12 million working Kenyans are not enrolled in any formal pension plan, and worse still, about 10 million who are not employed may not be saving for their retirement.

This is mostly caused by either lack of information on saving for retirement which they view as another form of taxation or fear of losing their dues upon retirement.

It also points to a potential social risk in the country that need to be addressed by all stakeholders.

READ: KAA suspends controversial JKIA parking fees

Okinda said that the fund will continue to invest in long-term projects that will improve the lives of retirees and ensure members are able to retire with at least 60 percent of their pre-retirement salaries through fund investment strategies such as the real estate in Kitengela and, commercial space in Westlands to cushion members from the country’s economic volatilities.

The fund, established in 2005, has registered exponential growth and stands at over Ksh 23 billion in assets.

Cavin Odhiambo is a reporter with Business Today. He has passion in dealing with socio-economic and political matters . You can reach him on [email protected]

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

BAKE Awards 2018 Nomination Badge

News Updates

Media Profile22 hours ago

Betty Kyallo: Just petty or real drama queen?

If fame has followed her as she rose through the ranks, so has controversy, the latest being the beef with former...

NEWS22 hours ago

Kenyan woman makes it to TIME 100 list for 2018

Nice Nailantei Leng'ete was named among the world's Most Influential Persons in the world for her crusade against Female Genital...

NEWS1 day ago

MP Shah Hospital under fire over ‘exorbitant’ bill

Kenyans on social media are unhappy after hospital billed a family of a woman who was stabbed by thugs and...

NEWS1 day ago

Baringo South MP Grace Kipchoim is dead

She is credited for being in the forefront in fighting outdated cultural practices, including cattle rustling and female genital mutilation...

Business Unusual1 day ago

Jobless young women turn to sex for money

Report shows that within an overall pattern of a system rigged against youth, there are worse prospects of accessing decent...

Education2 days ago

Is Kirubi company buying Daystar University?

The university was closed last week after students refused to return to class, protesting failure to release a report on...

Health2 days ago

Insurers issue warning as healthcare costs overrun inflation

According to Minet Kenya, while the medical insurance industry recorded a growth of 0.65% in gross premiums, claims incurred over...

Careers3 days ago

How to join university with D+ and get a degree

There is a one-year programme that enables students to progress to diploma then proceed to the professional qualification and onto...

NEWS3 days ago

10 million youth ready to leave Kenya

British Council report says many young people frustrated by corruption and a ‘rigged system’ that have resulted in high unemployment

Education3 days ago

Kenya to host global education conference

The event will gather Ministers of Education from the 54 African countries, as well as UN agencies, NGOs, and high...