RBA to issue rules on micro-pension schemes

The Retirement Benefits Authority (RBA) is to issue rules on micro-pension activities in the country.

Authority research and development manager Nzomo Mutuku said the sector is plagued with inconsistencies that have contributed to low pension savings from workers in the informal sector.

“The current schemes have questionable structures and governance, resulting in diminished confidence by clients. A body is needed to regulate the activities in this sector and increase its uptake,” he said.

He spoke when he received research findings from the United States International University (USIU) in Nairobi.

The findings, dubbed Critical Success Factors for a Sustainable Micro-Pension Scheme, indicated that less than 1 per cent of workers in informal employment are saving for retirement compared to 15 per cent of those who have been employed formally.

Hurdles include the temporary nature of their employment and negative perception of financial institutions, according to Mr Amos Njuguna, an assistant professor at USIU’s Chandaria School of Business.