Government has been urged to spearhead the growth and further development of the pensions industry through bolder policy reforms to build back a more resilient and inclusive pensions industry post Covid-19.
Speaking at the official opening of a two-day Pension Conference organized by Zamara, Zamara Group CEO, Sundeep Raichura called for bolder policy measures including making pension contributions compulsory and significantly increasing the tax breaks for the sector.
“The monetary limit on tax deductible pension contributions has remained at K Shs 20,000 per month for the last 18 years and this needs to be significantly increased or removed to increase long term savings in the country” said Raichura. Adding that, “We can increase long term domestic savings critical to fuel economic growth and create jobs much faster if we implement bolder pension reforms of the type that several countries in Africa such as Ghana, Nigeria and Malawi had implemented.”
Raichura also said there was an urgent need to extend pension coverage to the uncovered informal sector especially with 85% of the workforce in the informal sector. “An informal sector worker has as much if not higher need than their formal sector counterpart to provide for or be protected against the loss of income earning capacity in old age” said Raichura adding that Zamara has solutions to enable tech-based enrollment and flexible savings by informal sector workers.
RBA CEO Nzomo Mutuku said that whereas the pensions sector was hit with the Covid-19 pandemic, the industry still registered growth to cross the K Shs 1.4trn mark. Mutuku urged pension fund trustees and providers to consider innovating new products to enable Kenyans benefit from the favorable regulations implemented by RBA. He lauded pension trustees who had included provision for post-retirement medical savings in their schemes especially given the plight of retirees without medical cover. He also decried the lack of effective communication to pension fund members. “Pension fund members need communication beyond their benefit statements if they are to better plan their retirement” said Mutuku.
The two-day conference attended by more than 250 delegates including trustees from more than 100 retirement funds, regulators and industry players addressed critical questions on how pensions funds can thrive and be more impactful in a post Covid-19 world.