By MWANIKI WAHOME jwahome@ke.nationmedia.com
In Summary
- Increase the incentives to firms and individuals as country faces challenge of an ageing population, says financial services company
Financial services provider Alexander Forbes
wants the government to make it mandatory for employers to register
their workers in pension schemes.
Speaking during the company’s annual general meeting, managing director Sundeep Raichura also said the government should consider increasing incentives for pension schemes and individuals to build the numbers.
“We have suggested a basic universal pension to alleviate old-age poverty. We are asking the government to make it mandatory for employers with more than five workers to register with pension schemes,” he said.
He said Kenya was faced with the challenge of an ageing population, and it was important for the government to encourage more people to join pension schemes, particularly in the informal sector.
Out of an estimated 60,000 employers in the country, he said, only 1,400 had registered their workers with pension schemes.
He said pension coverage remained low in the country, with only two million out of 12 million in formal and informal employment registered, out of the national total population of 40 million.
Mr Raichura said the current incentives to pension
schemes were not enough to increase the numbers, adding that the
Sh20,000 deductible amount should be increased significantly as it had
not been reviewed over a period of five years.
He said that in countries like Ireland, the government matched contributions by individuals to boost the number of those registered.
And in Uganda and Tanzania it is mandatory for employers to register their workers with pension schemes.
He added that with East Africa’s harmonisation of
systems, Kenya should follow suit and make contribution to pension
schemes mandatory.
“If left to benevolence, employers will not register workers with pension schemes. Where this has thrived it is backed by legislation. Time has come for the government to make it mandatory for employers to register their workers with pension schemes,” said a trustee member, Mr Antony Kilavi.
The Alexander Forbes Retirement Fund, established six years ago, was the first multi-employer umbrella retirement fund in East Africa.
It has grown from a membership of two employers to 85 currently, covering 19,000 workers.
If the proposal to make the pension contribution
by employers mandatory is accepted by government, the fund will be among
those that stand to benefit from increased membership.
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