The Retirement Benefits Authority (RBA) has today launched a new Strategic Plan 2019 -2024 that will steer the pension body to new heights. Among the key target goals that the new strategic plan will seek to deliver is the realization of 30% pension coverage among Kenyans and an asset base of 2.4 Trillion Shillings by 2024.
“As mandated under the Retirement Benefits Act that was enacted as part of the on-going reform process in the financial sector in order to bring the retirement benefits industry under a harmonized legislation, to address the many problems that have hitherto faced the industry. As RBA we are committed to promote savings for retirement in Kenya through safeguarding, supervising and facilitating the development of the retirement benefits sector. This new strategic plan will help us create an inclusive, secure and growing retirement benefits sector, “says Nzomo Mutuku,Chief Executive Officer,Retirement Benefits Authority.
According Nzomo the pension industry in Kenya is worth KSh1.2 trillion in terms of assets under management but only 20 per cent of Kenyan workers are enrolled to a pension scheme.
Nzomo adds that “These statistics are worrying and that’s why as an organization we have to strategize our operations so as to ensure we build an authority that will strive towards ensuring Kenyans retire with dignity and this can only be done when we have more Kenyans enrolling on a pension scheme. This 2019-2024 plan is also aligned with the government’s broad development agenda as expressed in the Vision 2030, MTP III and the “Big 4 Agenda.”
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The RBA new strategic plan is anchored in three strategic themes which are transparency and accountability, integrity, and innovation.
“We shall achieve the above by ensuring that our work Policy and Regulatory Framework is geared towards increasing confidence in the retirement benefits sector. This will be accomplished by enhancing the capacity for policy formulation, improving the legal framework that guides the Authority’s operations, and strengthening surveillance of the sector in order to improve sector governance,” comments Nzomo.
He further acknowledges of the main reasons for the low uptake of pension scheme among Kenyans is that the pension services are designed for workers in the formal workplace who are less than 20 percent of the working population.
Nzomo , “ We must take into consideration that 80 percent of Kenyan employees work in the informal sector where they lack proper channels for contributing to retirement schemes.By enhancing Pension Coverage in the Informal Sector we shall be reaching out to those Kenyans who are outside the pension scheme.This will be realized by enhancing need-based outreach programmes, promoting the development of pension products that specifically target the informal sector. The Authority also recognizes that the general awareness among the Kenyan public of the need to save for retirement is already high and will be developing programmes to translate this awareness into actual enrolment in retirement benefits arrangements.”
The implementation of this new strategic plan will cost RBA Sh 1.5 billion. This will be majorly funded by projected levy collections and other income.
Funds collected by pension firms are usually invested in diverse asset classes like government bonds, equities, real estate, offshore investments, and PE funds. RBA are mandated that they regulate the investment activities by pension schemes in order to safeguard workers’ contributions.
Nzomo also acknowledge that most pension funds have started venturing into new asset classes such as offshore investments and Private Equity funds in an attempt to earn higher returns from their investments. The pension’s regulator said that they are working on a framework for the schemes to take part in Public-Private Partnerships to help with the many infrastructural development projects in the country.
