Relief for retirees as RBA allows formation of standalone medical schemes
By Noel.Wandera, April 8, 2022
Post-retirement medical funds (PRMF) can now be registered and regulated without need to be entrenched into pension funds following publication of regulations by the Retirement Benefits Authority (RBA).
Anne Mugo, RBA Chief Manager for Market Conduct said the move was a response to market sentiments, with stakeholders feeling previous regulations limited the scope of contributions from members. “This provision is in response to requests from the market. The previous regulation was only allowing you to contribute to your own scheme, but we were informed that some schemes do not want to set up medical funds so they are denying their members this benefit,” she said.
Mugo was speaking at a stakeholder conference in Nyeri organised by Enwealth Financial Services. The move is aimed at enabling more people access quality healthcare services after retirement.
Pension schemes
Previously, such funds were operated by pension schemes as a special fund, since their introduction in 2018.
This meant that members whose pension schemes did not wish to explore the medical insurance space were locked out from saving for their healthcare insurance during their working years. According to Mugo, the pension regulator will oversee the accumulation of contributions and management of the funds while the Insurance Regulatory Authority (IRA) will oversee the payments through medical services providers. She said PRMFs shall be required to appoint a corporate trustee to manage the fund and may seek actuarial expertise in design and funding. In addition, the funds shall be required to have registered within the country.
“The post-retirement medical schemes will cover pre-existing and high-risk conditions, an area that most insurers shy away from or charge extremely high premiums,” said Mugo.
A survey by Strathmore University and Enwealth Financial Services in May last year showed great distress among retirees, attributed to huge medical expenses they have to incur.
In the survey, 41 per cent of the retirees reported they had to pay cash for their medical bills. Only 32 per cent had medical insurance.