Savings and Credit Cooperative Societies (SACCOs) have taken lead in mobilizing savings for millions of members in Kenya. This has had an impact on financial inclusion especially in rural areas and the informal sector. A report by International Co-operative Alliance (ICA) – Africa cites that approximately 63% of the Kenyan population depends directly or indirectly on cooperative related activities
Over the years, SACCOs and Cooperatives in general have gained popularity in the country especially in rural areas. To millions, they are contributors to economic development, reduction of unemployment, and eradication of poverty. According to an online business news platform Kenyan Wallstreet, only 20 percent of Kenyan workers were enrolled to a pension scheme as of 2019 despite huge amount of collections.
One of the reasons for the low uptake is the perception that pension products are for workers in the formal sector. There is also lack of awareness on various individual pension schemes that are provided by various insurance companies in the country. Another reason for the low uptake would be due to the structure of the retirement benefits system in the country supported by the non-compelling laws around retirement savings.
Insurance companies in Kenya are a major provider of retirement benefits schemes. A good number of Life Insurance companies offer retirement benefits schemes, which include Employer Pension Plans, Umbrella Pension Plans and Individual Pension Plans. An individual pension plan is a saving product that one can separately set up to save money towards retirement
Individual pension plans are also suitable for those working in the informal sector as they are designed with flexible saving arrangements that fit self-employed individuals. For instance, with as low as KShs 500 a month you can join CIC Jipange pension plan and start your journey to financial freedom at retirement.
The Retirement Benefits Authority (RBA) registers and monitors the management of schemes to protect members’ savings. Saving in a registered retirement benefits scheme ensures that your savings are secure, in that the investment choices made by companies running retirement schemes are regulated to avoid cases of malpractice that would jeopardize the safety of members’ hard-earned money. Anyone over the age of 18 years who is either employed or self-employed can join an individual pension scheme by filling an application, which marks the beginning of the retirement journey. CIC Life has a team of experts whose role includes explaining how the individual pension product referred to as Jipange works. Their expertise includes guiding a potential customer on the amount of savings to consider setting aside in line with a person’s retirement savings goal.
With the impact Saccos have in the society, member education and sensitization on retirement savings can boost pension uptake in the country. Companies such as CIC Insurance are working with various Saccos to ensure members are equipped with knowledge on pension products and their benefits. Although this is bearing fruit, a lot still needs to be done to increase the level of awareness on the importance of saving for retirement to workers in all sectors. More so, for those in the formal sector, sensitizing Sacco members to understand that they can opt to increase the number of retirement savings options will require persistent effort.
CIC Life is working with stakeholders such as cooperatives, cognizant of what it takes to achieve financial security and avoid outliving financial resources post retirement. The insurer seeks to empower Sacco members with information that will enable them to become more financially secure as they journey through life. Given the wide membership of Saccos, partnering with the members is bound to have a significant effect on the perception and uptake of pension products.