Savings by low income earners hits Sh40m through pension scheme

 

Efforts to woo low-income earners to save for retirement have registered tremendous growth in terms of in earnings and membership since inception. 

The Retirement Benefits Authority (RBA) in June 2011 started Mbao pension plan targeting jua kali sector workers and others with erratic or low incom

RBA Chief Executive Edward Odundo said savings under the initiative have increased to Sh40.5 million as of the end of last year compared to Sh19.5 million returned in 2011.

Membership, he added, expanded to 39,900 last year compared to 32,800 members registered in 2011. “Currently, we collect a minimum of Sh4 million monthly under Mbao Pension Plan,” said Odundo.

Bright future

Quoting a report released by Co-optrust Investment Services, the retirement scheme’s Fund manager, Odundo said the future looks bright for the informal workers as they will enjoy and manage their retirement life.

 Major retirement benefit schemes   as at end of 2011 had assets to the tune of over Sh430 billion with National Social Security Fund (NSSF) leading with about Sh100 billion worth of assets. The progress by the jua kali sector workers signals a cut-throat competition to the traditional retirement providers such as NSSF and blue chip insurance companies.

  Various insurance companies have been serving the corporate market and neglecting the low-end market citing high risks in terms of payment by the clients.

NSSF a few years ago reviewed its business strategies whereby it introduced a new window targeting informal sector workers, such as, hawkers, farmers, matatu workers, and causal employees in most of organisations.

 CIC Insurance Company Chief Executive Officer Nelson Kuria says the change of game by big players in the insurance to expand their business to tap from low-end market is attributable to saturation the corporate market is facing currently.

“The corporate market is no longer growing like in the past thus promoting insurance companies to develop products customised for the informal sector workers – mainly the jua kali. The low-end market has high potential yet to be optimally tapped,” said Kuria on phone. CIC in 2009 initiated Jipange Pension Plan, which as at the end of last year had attracted more the Sh120 million with 3,000 members.

Daily saving of Sh20