RBA mulls pension scheme consolidation

The Retirement Benefits Authority (RBA) is mulling the possibility of consolidating pension funds in the country to make them more effective.

With over 1,000 pension schemes in the country, the authority feels that most are not addressing the needs of those especially in the informal sector.

According to RBA Chief Executive Edward Odundo, with retirement savings at a paltry 13 percent, large pension schemes will be able to innovate products to spur savings.

“We have about 1,200 schemes but our aim is to have even fewer schemes but large schemes,” Dr Odundo said during a trustee management forum in Naivasha.

By December 2015, pension savings stood at Sh814 billion according to data from the Retirements Benefit Authority.

Dr Odundo’s said the concern is that very few pension schemes have developed products that address the needs of those in the informal sector or even the elderly.

“We have a bigger group that is the informal sector and 85 percent of them don’t any savings,” he said.

The CEO was however quick to note that the pension scheme industry was on the rise adding that they expected it to hit the one trillion mark by the end of this year.

“In 2000, the sector was worth Sh50 billion but by the end of this year we expect to reach Sh1 trillion in terms of savings and investment,” he said.

He attributed the success in the industry to proper regulation framework, good governance and training of staff.

“Previously we had cases of pension money been stolen but due to good governance and proper legislative legal frame work we have seen the sector grow tremendously,” he said.

By Karanja Kimani