Lack of information on strategic investments is being attributed to many retirees being unable to meet their financial needs upon retiring.
According to speakers at the 5th Abojani Economic Empowerment Conference held in Nairobi, many working Kenyans do not have the right information on investments that will replenish lost earnings when they reach retirement age.
“There can be a challenge on household income but what we start with is information. Once you have the right information then it means that as a household once you get a lump sum or sell a piece of land you are more likely to invest it than when you don’t have information,” said Robert Ochieng, Founder and Chief Executive Officer of Abojani Investment
2024 FinAccess Household Survey indicates that Kenya has 1,027 registered pension schemes with Ksh 2.23 trillion in assets under management. However, only 32.2pc of retirees are able to meet their post-retirement needs.
Ochieng said there is need to educate workers, both in the formal and informal sector on the available investment options such as securities and real estate.
“The main key thing is on the equity side. If you can own stakes in companies whose products and services you consume, that can be a great thing because it means that as you spend you are also getting wealthier and that is what we want for African households,” he added.
In a bid to shore up pension adequacy, the Retirement Benefits Authority is also seeking to push for amendments on the Pensions Act. Currently, Kenya’s pensioners are able to meet just 30pc of their needs compare to global accepeted threshold of 40pc.
“Adequacy of pensions is a big issue. Currently the law allows one to access up to 50pc of their benefits at any given time even if they do not need it upon leaving a pension scheme. What we are doing is to amend the amount they can access and we have a proposal at the moment for people to only access up to 30pc of their benefits and not 50pc,” noted John Keah, Assistant Director Market Conduct and Industry Development Directorate, Retirement Benefits Authority.
Additionally, in order to increase capital markets participation by individuals, regulator are being challenged to relax listing rules which will attract Micro and Small Medium Enterprises especially family owned enterprises.
“Today in Africa, for you to list in the stock market you need to show sustainable growth in the past probably 5-10 years which is not the case for many businesses in Africa. So I think our regulators need to lower the barriers to entry to the capital markets and it is something we need to consider,” said Dr Diane Karusisi, CEO Bank of Kigali.
This year’s conference highlighted the urgent need for credible information, pension awareness, and digital transformation as key drivers of financial prosperity.
