RBA mulls new savings plan for informal sector

 

Retirement Benefits Authority (RBA) is mulling a new savings product that should help create a pension pool for the informal sector after stalling of the Mbao Pension plan.

Among the immediate interventions is to bundle up insurance and credit to the retirement plan after it became clear that non-salaried workers were inconsistent in saving.

RBA Chief Executive Nzomo Mutuku (pictured) said a product with a broader offering than just savings would enable informal sector players to borrow against what they have set aside for old age.

“We want to have a single package that even includes a funeral package that we think would attract the informal sector, which is the biggest employer,” he said at the launch of RBA’s Strategic Plan that covers until 2024.

Such a product, it is anticipated, would allow the unsalaried workers to keep saving with the assurance that the same kitty would serve as collateral should they need to borrow in case of unforeseen situations.

Mr Mutuku said the uptake of the Mbao Pension plan, structured to allow informal workers to keep aside at least Sh20 a day, has stunted at just about 100,000 members.

Even with the rather low uptake for the individual scheme launched about a decade ago, the savings have been hugely erratic.

“One reason we have seen the inconsistency is that these people do not have a regular income, which is why we are planning the new product,” Mutuku said.