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Kenya’s insurance companies on Friday launched an accelerated push for the growth of the pensions industry by calling on the government to reform payment rules for retirees and facilitate close to a quarter of the country’s 44 million people to acquire pension services. insurance over
The Association of Kenya Insurers (AKI), grouping 44 insurance companies, pledged to increase the value of the pensions industry from 7.8 billion U.S. dollars if the government facilitates at least 13 million people to access pension services as a valued form of reward for retired workers.
“We need education to the population to increase the purchase of pension services,” David Ogega, AKI’s Pension Committee Convener told journalists in Nairobi.
Kenya has 4 million people in formal employment while 9 million people, 80 percent of the workforce, are either self-employed or work in the informal sector of the economy with no access to pension.
“We look to exceed our projected growth if the 9 million people in the informal employment and 4 million are helped to access insurance services for their retirement plans,” Ogega told reporters.
The insurers said efforts to recruit self-employed workers into personal pension schemes could help grow national savings in Kenya, which could provide additional funds for long-term investments.
The funds generated from these new recruits would then be invested into the real estate, where insurance companies are now training their eyes to increase returns on investment.
“We currently engage in the purchase of government bonds and there is good opportunity for us to engage in private-public partnerships in infrastructure. We see more opportunity for portfolio purchases,” Ogega said.
Currently, employers are required to collect a percentage of monthly earnings from employees and remit to the National Social Security Fund (NSSF), currently valued to 1.4 billion dollars. The Fund registered 22 percent growth in assets base in 2013.
Insurance firm managers say if financial sector rules are reformed, insurance companies could help create more wealth by investing in unquoted company stocks and equity.
Most insurance firms are institutional investors at the Nairobi Securities Exchange (NSE), but insist reforms could help create additional wealth in other sectors of the national economy.
“We feel we have avenues to capture other sectors of the economy,” said Josephat Muthwii, Under-Writing Manager at Madison Insurance, a local insurance firm.
The insurers want the government to issue new regulations to specify and separate the roles of the National Social Security Fund (NSSF) from the financial sector regulators — the Retirement Benefits Authority (RBA) and the Insurance Regulatory Authority (IRA).
NSSF collects and manages pension on behalf of employee for lump-sum or part payments to workers upon retirement age of 60 years.
AKI Executive Director Tom Gichuhi said about 15 percent of the total labor force is enrolled in a registered pension. “This means that a majority will not have a steady income when they retire,” Gichuhi said.
He said urbanization has lead to the breakdown of the traditional social systems that ensured that children who are working take care of their aging parents.
“Unfortunately, in the capitalism system adults don’t have enough spare money for their parents who mostly reside in the rural areas,” Gichuhi said.
Government data indicates that the pension industry holds about 7.8 billion U.S. dollars as of 2014 in retirement funds. The insurance industry manages less than 15 percent of the figure, with the rest being held by government and private entities. Enditem



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