Mbao pension plan registers 149pc growth

 

Retirement Benefits Authority CEO Edward Odundo. Photo/FILE 

By JOHN NJIRU jnjiru@ke.nationmedia.com
Posted  Monday, August 6  2012 at  17:45

0inSha

The retirement scheme targeting the informal sector more than doubled its membership growth during the first six months of this year, according to the latest report by Co-op Trust Investment Services.

The report shows that Mbao Pension Plan registered 32,879 members in June, compared with 13,200 who joined the fund in January — a 149 per cent growth.

This has been attributed to positive reception of the scheme by the informal sector, according to Retirement Benefits Authority (RBA) chief executive Edward Odundo.

“The fund is doing well with commendable returns because of improved knowledge on savings among the informal sector,” he said.

During this year’s financial period, the fund value of Mbao Pension recorded exponential growth to record Sh19.5 million at the end of June, compared with Sh9.1 million in April and Sh3.5 million in January.

According to a risk consultant, Mr Kariithi Murimi, the intensive marketing awareness by the retirement authority was bearing fruits.

Mr Murimi urged RBA to push for higher investment savings from the current Sh20 to facilitate better returns and benefits to members.

He asked the retirement authority to explain to benefactors the type of investments undertaken to prevent conflict when the pension date falls due.

Members should also be sensitised on the expected returns in relation to savings, the impact of the returns compared with inflation rates and the long-term objectives for the funds.

“If the inflation rate is higher than the percentage returns, the benefits will be swallowed up and the savings will register negative figures,” he explained.

Some Sh3 million of the micro-pension funds are invested in cash and call, Sh5.5 million in government treasury papers, and Sh10.9 million in fixed deposits, resulting in capital gains of Sh368,291 during the half-year period.

Research on the country’s micro-pension scheme tabled last week by the US International University indicated that less than 1 per cent of workers in the informal employment were saving for retirement, compared with 15 per cent of those in formal employment.