consolidate savings ?
The Covid-19 crisis has caused disruptions and hampered economic growth the world over . The pandemic has led to declining labor demand which , despite governments ’ efforts to preserve jobs , is translating into not only lower employment rates but also lower activity rates .
In particular , older workers who are more vulnerable to the coronavirus , have reasonably large pension entitlements , and often have a lower likelihood of re-entering employment - may seek to permanently exit the labor force and retire .
We however believe that this period ought to be used to cut on spending at a personal level and reduce discretionary spending . This way , we make good out of a negative situation . On the investment front , our Pension funds are well diversified to mitigate the attendant risks . We are therefore optimistic that despite the prevailing tough conditions , members ’ funds will continue to grow with us .
How does Kenya ’ s pension industry compare with elsewhere in the world and what lessons can we draw from them ?
Kenya is recognized for its pension systems and ranks 55th globally . In Africa , Kenya ’ s pension systems are ranked second after South Africa . However , many emerging countries in Africa or Asia score rather well as the population is still young and public deficits and debts are rather low .
On the other hand , many European countries such as Italy or Portugal are among the worst performers owing to the fact that old populations are forced to meet high debts . The most important lesson we can draw from countries doing better than us is to ensure that we increase pension coverage to least 75 % of the working-age population .
Do we , as a society , need to start adjusting our idea of what retirement looks like ?
Absolutely . It is important that we not only impart the habit of saving early enough , but we also demystify what life looks like in retirement when one is not prepared for it . It is very devastating to
With Mpension , you can access a pension and retirement savings platform by simply dialing * 289 # on any mobile device . CPF Financial Services has gone into partnership with Safaricom to enable more Kenyans save for their future using Bonga points .
work all your life and end up not being able to afford basic needs once one retires .
Times have changed and parents can no longer count on depending on their children to support them in retirement . It ’ s therefore incumbent upon all of us to plan while we are still actively working to realize the dream of a comfortable retirement .
What ’ s your advice for people at the start of their careers - and who still like the idea of retiring at 60 ?
Simple . Start saving now , put a plan in place and stick to it . There will always be new phones , new cars and new shiny things but it is delayed gratification that yields a fulfilling life in retirement . With CPF M-Pension , you can contribute as little as Kshs . 500 per day or per month and this will guarantee you a comfortable life once you retire .
How about those people who are mid-career and perhaps have a target date retirement fund ; what should they do next ?
It is never too late . If you have a plan in place ( which we can help you put together ) you will meet your target amount with little strain .
Where do you see the Industry in the next 5 years , and how does that impact on the preparedness of Kenyans for their future ?
The industry has made great stride over the last decade . Back then access to retirement and pension saving schemes was a preserve of the few who were employed . Today , pension products such as M-Pension can be accessed by any Kenyan , anywhere .
Mobile and technological advancements will continue to greatly influence how people save . Pension funds will therefore have to ensure seamless integration of services and customer experience will create the distinction between successful and unsuccessful pension administrators .
What is the role of Government in all this ?
Government will play a crucial and critical role in creating the necessary incentives as well as progressive regulation of the industry . The Retirement Benefits Authority ( RBA ) has done this quite well . However , in my opinion , Government should make pension mandatory for all Kenyans because ultimately , an aged population that does not have a plan in place becomes a huge burden to the government of the day . Government therefore has a vital role in the conceptualization of legal and regulatory infrastructure to ensure that this is realized .
As industry players , we are ready to engage with the government and to propose solutions to see to it that this dream of extending coverage to all Kenyans is realized .
These are excerpts from the conversation with Hosea Kili , Group Chief Executive Officer , CPF Group . For more information or comments drop us a line on : Info @ marketingafrica . co . ke .