By Nicholas Waitathu
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 income.
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
Each a member pays a minimum of Sh500 every month translating to less
than Sh20 daily. Odundo said the growth of Mbao Pension Plan;
especially its membership was a big step in the right direction.
This, he observed shows Kenyans are increasingly appreciating the
need to save for their retirement. The Co-optrust report notes that
during the last quarter of last year members saved a total of Sh9.1
million where members pay daily contribution of Sh20 remitted via
Safaricom’s mobile transfer service M-Pesa or Airtel money service.
The report attributed the good performance of Mbao Pension Plan to
promotion campaigns by RBA and regular SMSs Safaricom sends out to the
pension plan’s members reminding them to make their contributions.
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