A majority of Kenyans are now opting to invest in property as opposed to saving up for retirement through pension schemes.
According to a survey conducted by Infotrack, 90 per cent of Kenyans do not have an individual pension plan with the main reason being that there are no viable pension schemes that meet their needs.
The survey indicates that a majority of Kenyans rely on inheritance and investments to cater for their financial needs after retirement. The retirement age in the country is 60.
The survey was conducted between May 28 and 29, 2019 with respondents sampled from Coast, North Eastern, Eastern, Central, Rift Valley, Western, Nyanza and Nairobi counties. It was commissioned by the County Pension Fund (CPF).
Out of 1,500 respondents interviewed, 42 per cent indicated that they prefer having investments as a source of income when they retire while another 27 per cent chose to have their personal savings as source of income. Only 11 per cent said they would rely on their pension after retirement, with 9 per cent choosing to invest in property.
Another three per cent said they would rely on inheritance as their source of retirement income.
Local Authorities and Pension Trust (Laptrust) CEO, Hosea Kili said a majority of Kenyans were at risk of old-age poverty, and would have to work for the rest of their lives to survive and support their lifestyles.
He was speaking during the launch of the survey and celebration of Laptrust’s 90th anniversary at City Hall yesterday.
“Levels of pension savings are poorest among the youngest working age groups meaning that the poverty trap will explode in the next few decades,” said Kili.
“We continue to grapple with the challenge of timely collection of members’ current contributions as well as historical debt. We appeal to both the national and county governments to step up the efforts towards finding a final solution to the matter,” he said.
The study further indicated that whereas a majority of Kenyans agreed it was necessary to save more for retirement as they grow older, they save their money in bank accounts, saccos, investment groups, mobile phone money applications, insurance policies or keep their money at home.
It further attributed the low enrollment of Kenyans to pension schemes on the limited awareness of registered individual pension schemes in Kenya.
“Most of those interviewed said that they were not aware of any suitable pension schemes they can contribute to, cannot afford to set aside any money for their pension or were not interested in setting aside money for retirement,” stated the the report.
Majority of Kenyans, it shows, are saving for future purchases of items they cannot readily afford and for emergencies.
Devolution Cabinet Secretary Eugene Wamalwa urged Kenyans to take more control of their retirement future by saving up through pensions.
“It would be erroneous to think that social security is a luxury to be afforded only when growth has taken place or when countries have reached a certain level of per capita income. The time to make the change to guarantee social protection for all is now,” said the CS.
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