Medical costs painful headache for retirees

32%

Reduced Income

27%

Low Lumpsum

14%

Income Variability

14%

Accessing Credit

14%

Financial Concerns in retirement

Medical cover and reduced income are the highest financial concerns among retirees

Percent

Medical cover

Reduced Income

Low Lumpsum

Income Variability

Accessing Credit

Medical cover

By JOHN MUTUA
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Summary

• Almost two thirds of retirees or 32 per cent cite medical cover as their leading concern followed by 27 per cent who worry about reduced income.
• Low pension payout, income variability and challenges in accessing credit rank low, each at 14 per cent.
• The survey was conducted by Strathmore Institute of Mathematical Sciences in partnership with Enwealth Financial Services, a fund administrator.
• Kenya does not have a definite retirement age, but official figures indicate that 1.328 million Kenyans are currently aged above 64 years.

Of all the things that worry Kenya’s senior citizens, exposure to high medical bills tops the list, a new survey has found.

Almost two thirds of retirees or 32 per cent cite medical cover as their leading concern followed by 27 per cent who worry about reduced income. Low pension payout, income variability and challenges in accessing credit rank low, each at 14 per cent.

The survey was conducted by Strathmore Institute of Mathematical Sciences in partnership with Enwealth Financial Services, a fund administrator.

Kenya does not have a definite retirement age, but official figures indicate that 1.328 million Kenyans are currently aged above 64 years.

The survey covered a sample size of 203 respondents from formal and informal establishments. Out of respondents, just one half is covered under the National Hospital Insurance Fund (NHIF) of which 30 per cent also have comprehensive cover. The rest of the senior citizens have to defray the cost of medical treatment out of pocket.

Of the Kenyans covered by NHIF and corporate medical schemes, the exposure is not entirely addressed as some private insurance schemes often refuse to cover critical ailments like cancer and diabetes, which are common among the ageing population.

The Economic Survey 2018 shows that a paltry 6.8 million Kenyans in both formal and informal were registered active members of NHIF last year, an 11.1 per cent rise from 6.1 million in the 2015-16 period.

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In public offices alone, 59,400 civil servants are set to retire will retire by June 2020 after hitting the 60-year mark.

This is likely to add to the current pile of Kenya’s broke senior citizens unless the State promptly releases the Sh104 billion pension bill in year ending June 2020.

The limited financial ability to cater for medical expenses has further been worsened by increased budget for healthy foods in the face of diseases such as cancer and heart complications.

According to the survey, food becomes the top expense item when retirement kicks in as opposed to pre-retirement period when school fees leads followed by investment and rent. “Food stuffs are expensive. The same kind of foodstuff you were eating when you had your employment and your Sh400,000, now you are getting maybe Sh80,000 or Sh100,000. Can you see the difference? Big difference. Big difference,” one of the respondents is quoted as having said.

Most of the senor citizens have resorted to growing food crops for themselves to ensure a reliable and cheap source of nutrition. Some essential types of food can, however, only come from the supermarkets.

The survey found that increasing medical expenses have strained retirees’ ability to meet other daily demands, pushing them to venture into self-help groups commonly referred to as chamas and agribusiness to diversify their income streams.

The government is considering an amendment to the Retirement Benefits regulations to allow members of pension schemes to ring-fence a share of their benefits for post-retirement medical.

This, according to Enwealth Financial Services is a major way of cushioning scheme members from the high medical expenses in the sunset days.

“This proposed initiatives allow pre-funding for medical needs during the working life and exempting the funds set aside for post-retirement medical funds from the annual RBA Levy will increase member trust and possibly increase savings to meet rising medical expenses during one’s retirement,” Enwealth’s chief executive officer, Simon Wafubwa said.

The firm also raised concerns on retirement investments by Kenyans saying a high percentage go to non-income generating ventures.

According to the report, most retirees from the formal sector used 25 per cent of their lump sum on building retirement homes, 20 per cent on school fees while 15 per cent goes into agribusiness.