Summary of the discussion.

1. Industry Status and Challenges
   • Current pension coverage stands at 26% with KSh 2.1 trillion in assets (15% of GDP)
   • 55% of pensioners receive less than KSh 20,000 monthly pension
   • 57% of pensioners feel their retirement savings are insufficient
   • Unremitted contributions have reached KSh 57 billion as of December 2024
   • Over-concentration of investments in government securities (51% of assets)
   • Low pension coverage in the informal sector (which comprises 83% of the workforce)
   • Administrators Development Program of Kenya (ADPK) Curriculum is at an advanced stage
2. Recent Policy Developments
   • National Retirement Benefits Policy focusing on coordination, coverage, governance, and innovation.
   • Enhanced tax free limits on contributions (from KSh 20,000 to 30,000).
   • Introduction of tax deductions for Post-Retirement Medical Fund contributions up to KSh 15,000.
   • Simplified registration processes for pension schemes.
   • Clarified that registered schemes are exempt from corporate tax.
   • Implementation of NSSF Act 2013 to enhance savings through 12% contribution rate.
3. Action Items for Stakeholders
   • Develop remedial action plans for unremitted contributions, addressing the challenge that employers often don’t honor these plans.
     Leverage technology through the Integrated Pension Information Management System.
   • The development of the informal sector should be advanced through the strategic implementation of micro-pension systems and targeted educational programs.
   • We advocate for legislative amendments to the Retirement Benefits Act, encompassing strengthened preservation measures and refined collection
     processes.
   • A comprehensive review should be undertaken of the potential for combining pension products related to borrowing, medical expenses, and housing.
   • Strive to achieve a strategic pension coverage target of 34% and KSh 3.2 trillion in assets by the year 2029.
   • Investment managers should strategically allocate assets beyond conventional categories while ensuring capital preservation and generating corresponding returns.
   • Implement “Treating Customers Fairly” principles by creating mechanisms for members of segregated funds to track performance over time
   • Federation of Kenya Employers to conduct a survey on the impact of NSSF Act 2013.
   • Advocate for the reclassification of post-retirement medical funds as long-term products to address associated regulatory challenges.
   • Expedite the NSSF matter at the Court of Appeal through stakeholder conversation/mediation.
   • Collaborate on projects designed to enhance regional pension portability by coordinating policies, establishing bilateral agreements, and reviewing existing legislation.
   • Focus on innovations to increase youth participation in pension schemes and leverage existing social networks like “chamas”
   • Efforts should focus on preserving the NSSF Act of 2013, while accommodating required amendments. Engagement with stakeholders through dialogue and mediation is recommended.

Share on Facebook

Post on X

Follow us

Save