Summary
- Planning for your retirement starts on the day you get employed. Whereas this is ideal, the reality is that most individuals hold off retirement planning until in their 40s or even 50s.
- We often see retirement confidence revealed in the media. We have had judges, teachers, executives in State agencies and numerous professionals contesting to have their contracts extended to surpass the recommended retirement age.
- Retirement planning training is often undertaken as an afterthought or when employees have less than five years to retirement giving them very little time to change mindset, behaviour and save for their financial needs in retirement.
Planning for your retirement starts on the day you get employed.
Whereas this is ideal, the reality is that most individuals hold off
retirement planning until in their 40s or even 50s.
We
often see retirement confidence revealed in the media. We have had
judges, teachers, executives in State agencies and numerous
professionals contesting to have their contracts extended to surpass the
recommended retirement age.
Therefore, the big
question remains, who is to blame for the lack of preparedness? Is it a
result of ignorance on the part of the individual or the human resource
(HR) function?
Whereas retirement planning is
ultimately an individual responsibility, studies show that setting
employees’ minds at rest about their retirement will make them more
productive, loyal and committed. Employees leave the organisation
feeling that their worth was recognised at every stage of their career.
Therefore, involvement by both the individual and HR offers a win-win solution for both parties.
This
goes against the widely accepted practice where learning and
development initiatives undertaken by the HR centre around transferring
technical or soft skills that are geared towards closing employees’
competency gaps.
Retirement planning training is often
undertaken as an afterthought or when employees have less than five
years to retirement giving them very little time to change mindset,
behaviour and save for their financial needs in retirement.
Based
on recent research findings from a study carried out by Enwealth
Financial Services in partnership with Strathmore University and the
Institute of Human Resource Management, only one in seven Kenyans (14
per cent) are ‘very confident’ that they will outlive their retirement
savings.
Also interestingly, positive saving behaviours such as having an
emergency fund, maintaining a bank account or paying up credit when due
do not impact an individual’s retirement confidence — this further
shows the need for financial management programmes that go further than
helping individuals budget, get out of debt or come up with a plan.
The
sensitisation should provide insights into much more critical
retirement issues like estate planning, age-based investment, the
nomination of beneficiaries, income replacement rations and compounding
effect, among.
The training has to go beyond the
textbook action of estimating retirement needs but focus on holistic
investment advice that takes to account retirement planning for
individuals and their spouses and portfolio building. It’s only through
taking this approach that we will enable members to make informed
investment decisions.
Additionally, HR practitioners
need to take advantage of information technology not only as an enabler
of operational efficiency but also as a platform for innovative
financial literacy and member communication.
As we
cross over to the new year 2019 and get a year closer to retirement, let
us all take a critical evaluation of how well prepared we are for this
certain transition.
Moreover, the HR functions should
seek to support the 86 per cent of employed Kenyans who lack confidence
in their retirement preparedness. After all, it’s good for business.
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