RBA shocked by poor Kenyan savings culture
By Reuben.Mwambingu, May 23, 2024
The Retirement Benefits Authority (RBA) has sounded the alarm over the insufficient culture of saving famong retiring Kenyans, pointing out that a large percentage of the population is at risk of facing poverty in their later years.
Only 26 per cent of the labor force in Kenya is currently saving for retirement according to RBA Chief Executive Officer Charles Machira (above), who said the status quo raises concerns about the financial security of the majority of citizens.
Speaking during the Mombasa Huduma Clinic at the Huduma Center, Machira noted that Kenya’s retirement benefits industry currently holds assets exceeding Sh 1.7 trillion, according to latest data recorded last December 2023. However, he said “This substantial sum belongs to only 25 per cent of those in the formal sector.”
“We must bridge this gap and build trust in this agenda,” Machira noted, revealing that available records indicate “approximately seven out of 10 Kenyans face the risk of falling into poverty upon retirement due to inadequate savings.”
“This is deeply concerning and I firmly believe that all stakeholders in the pension industry including the media, have a pivotal role to play in reversing this trend by enlightening Kenyans on the imperative of retirement savings,” the CEO noted in Mombasa adding: “It is this low coverage that prompted our collaboration with Huduma secretariat to disseminate this message more effectively across the nation.”
The Authority is keen to expand the coverage from the current 26 per cent up to 34 percent by 2029 as per its 2024-2029 strategic plan.
“Even as we have a limited number of people preparing for retirement, the opportunities are available. Kenya boasts over a thousand pension schemes, including more than 40 individual pension schemes. There should be no reason for anyone to lack a means of living in retirement. It is crucial that we spread this message, which is why we collaborate with various providers, the national government, and county Kenya to ensure we bring awareness to our people “he observed. While noting that some pension schemes have not received timely contributions, the CEO noted that the rule mandates that contributions be sent to the scheme within 10 days each month.
He warned the authority will reign-in on employers who fail to remit contributions on time.