Why pension funds should invest in healthcare provision

 

An analysis of a retiree’s needs shows that the biggest worry is how to take care of their medical bills hence the need for pension funds to get involved in provision of such services. FILE  Fotosearch

By Edward Omete

In Summary

• Investing in healthcare is not just prudent but long overdue for pension fund

The proposed changes in the social security fund seek to increase the current mandatory contribution and fix it as a percentage of one’s earnings.

Retirement benefits are a lifeline for many retired rural folk but are often too little. As such, they are used to augment sustenance and for emergencies.

With life expectancy rising nationally, retirees may live to their eighties especially those in the 40-65 years cohort. Sadly for this group, old age heralds difficult times since only three in ten are pensionable.

The number of hospital visits for retirees is more and the cost of such services is also high. Most of the conditions are not curable and the medication prescribed often needs to be taken longer.

An analysis of a retiree’s needs shows that the biggest worry is how to take care of their medical bills. This period is associated with failing health, chronic medical conditions and rising incidence of cancer.

To worsen the picture, in the next decade their medical costs will triple. The current average consultation fee of Sh500 will be at Sh3000 or more.

The fact that most insurance products exclude people in this group means that a majority have to pay out of their pocket.

For the National Social Security Fund (NSSF) and the private pension funds, perhaps it is time they started thinking about such issues. The little emoluments given to their members go largely to health use leaving little for promoting the quality of life upon retirement as desired.

In light of this, we are trying to engage pension funds in an attempt to channel some of the billions they hold towards their members’ health interests.

One of the proposals of a doctors’ think tank — the Health Information Network — is that investing in healthcare is not just prudent but long overdue for pension funds.

Our bone of contention is that their investments are often not aligned with their contributors’ needs. The focus is in real estate and the stock exchange among others.

A similar scenario applies to private pension funds. The resources they hold should be used to prepare for their members’ future. Transitioning from the luxury of private medical cover to public facilities can be a harrowing experience.

Rural practitioners like me know the pains of retirees. Many travel hundreds of kilometres to access quality health services, in the process, spending most of their pension savings.

The big question to the unions that represent their workers needs is, “Should the NSSF and private pension funds invest members’ money in private healthcare partnerships?”

Many health entrepreneurs are keen on such collaborations, not just because it is a cheap source of capital, but because it alleviates the suffering experienced by retirees