The last few years have been very trying to many retirees and their future is still in limbo. Some had their retirement funds that were in banks that collapsed, some bought insurance policies in companies that have had difficulties making payments on matured policies.

The Retirement Benefits Authority (RBA) oversees 1,000 individual schemes at companies and 40 others that are available to individuals (PDF) to the public. It’s important to note that insurance policies are not all retirement plans. Some insurance companies have RBA-approved  retirement schemes, but they usually have “retirement” or “pension” in the names. Any other may not have the features and protections for retirees. The goal at the RBA is to secure funds for retirees have them invested and be paid as and when they are called for to pay retirees. They do this through licensing a network of professional companies to operate retiree plans, and an RBA-licensed scheme relies on a system of checks and balances with separate roles of different players. The players include:

• Trustees; who manage schemes for retirees best interests of the beneficiaries,
• Fund Managers: who prudently invest funds to grow
• Custodians: Hold documents for the retirees fund
• Administrators: who keep records and communicate with members
• Actuaries

For the first two decades after independence, corporates jobs had assured retirements. They were defined as permanent and pensionable. Companies invested in their employee’s retirement and the amounts to be paid out at retirements (defined benefits) were guaranteed.

But those jobs are no more. These days if companies have pension schemes they are all defined contribution – what an employee sets aside to save and invest is what earns him/her funds when they retire, or even if you need a portion of it before retirement age e.g. for a mortgage.

The statutory retirement body, the National Social Security Fund has a long chequered history. But through working with the RBA they have moved towards becoming a proper pension body with the most important steps being that they have appointed independent custodians and investments managers. The days when most of their portfolio was in questionable land or members funds collapsed with stockbrokers or weak banks should now be behind them now. But NSSF has just 1.7 million members and over Kshs 165 billion in assets as at June 2015. And in a country of 43 million people, if half of them are under the age of 18, it still means there are  a few million working adults who probably have no pension plan for themselves who will one day get old and wonder who is going to take care of them

There are many plans all over, that allow different payments or levels of investment, and some are even shariah compliant schemes. Take up one of them. Don’t #kulegalega

If you have any questions are retirement benefits in Kenya, send an email to bankelele@hotmail.com