Changes in the 2019/2020 Budget to Promote Retirement Benefits Industry

The changes in the 2019/2020 budget aimed at the Retirement Benefits Industry will go a long way in promoting the industry and protecting members’ interests, with the primary goal being to secure their retirement years.

These are sentiments held by real estate company, Cytonn Investments, in their weekly report dubbed “Impact of Proposed Budget Changes to Pensions Industry”.

Prior to the formation of the Retirement Benefits Authority (RBA), the Retirement Benefits Industry did not have effective regulation and supervision, and the interests of members were not sufficiently protected.

This era was characterized by poor administration, mismanagement of scheme funds as well as outright misappropriation of funds.

A report done by the World Bank in 2018 shows that Kenya’s population is aging and the number of the elderly as a percentage of the population is expected to hit 7 percent by 2050, from the current 3 percent.

For this reason, there is a need to ensure that some form of old-age protection is provided to the elderly and ensure security against destitution during old age.

One of the major changes effected in the 2019/2020 Budget is that pension money will only be accessible after retirement, as opposed to earlier when employees could access their pensions, up to half of the contributions even before retirement.

Read Also: Pension Money Will Only Be Accessible After Retirement, Says Treasury

Another key change effected is that the transfer period of Schemes that invest in Guaranteed Schemes and wish to withdraw their funds and transfer them to another Scheme, (Guaranteed or Segregated) was reduced from three-years to one-year, effective January 2020.

To read more on the changes effected in the Retirements Benefit Industry, click here.

“With the Retirement Benefits Industry growing, we expect the RBA to continue amending the regulations to accommodate the changes that might come by” read part of the Cytonn Report.

When comparing Kenya’s Retirement Benefits Industry with those around the world, there are similar challenges.

Global coverage and adequacy of pensions is a challenge even in advanced economies, and there is need for regulators to continuously enforce reforms and regulations that enhance the Retirement Benefits Industry by smoothing the distribution of consumption spending over an individuals’ life, i.e. in both productive years and least productive years.

The Retirement Benefits Authority in Kenya has evidently improved the industry immeasurably and it continues to come up with ways to drive the industry to higher heights through investment in member education and constantly amending the regulations.

This will continue increasing the public’s confidence in the industry and attract more people to save for retirement and consequently protecting their golden years.

Read Also: Cytonn Asset Managers Limited Launches its Pensions Business