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Individual Retirement Benefit Schemes in Kenya
If you are self employed or work in the informal sector, you are probably wondering, how can I plan for my retirement? Your option is to choose one of the available Personal Pension Plans. PPPs are private pension schemes offered mostly by financial institutions such as banks and insurance companies. Since they are very many, before you make your choice, consider the following factors:
- How your personal situation now and what is are your plans for the future?
- What is the reputation of the company? Its directors and shareholders?
- What is the technical capability of the company?
- Observe their customer care and services. Do they offer personalized services?
- Their track in record keeping
- Look at the past results of their performance. Success? Failure? What were the causes of failure?
- What are the administrative costs?
- What penalties and charges are imposed when one is not able to make regular contributions due to, for example, loss of employment, illness or career break?
- Contribution payments – whether regular amount of contributions are to be paid for a given number of years or one has the flexibility to change the amount and whether it is at a cost.
- Can a member participate in selecting investments of the funds?
- Do they have extra benefits like; educational programs?
Below you will find examples of financial institutions with branches in several towns in Kenya that offer individual retirement benefits. You can also walk into any bank or insurance company in your area and inquire if they have the scheme.
- UAP Provincial Insurance Company Limited – Individual Retirement Benefits Schemes
- Cannon Personal Pension Plan Insurance
- Co-op Trust Limited Individual Pension Plan Bank
- Jubilee Insurance Company Ltd Personal Pension Plan Insurance
- Amana Personal Pension Plan Fund Manager
- ICEA Individual Retirement Benefits Scheme Insurance
- Madison Insurance Personal Pension Plan Insurance
This is a flexible scheme meaning that you can change jobs without losing your benefits and your savings have tax relief.
Start Saving for Retirement in Kenya
Saving for retirement in Kenya is one of the most neglected financial obligations in the country. Most young people hardly spare a thought to saving for retirement until old age comes knocking. One of the reasons why it may be quite hard to save is because for most people meeting their daily expenses leave alone save for the future is such a hassle.
For most Kenyans employed in the formal sector, retirement savings usually consists of mandatory contributions to a pension scheme set up by their employer. Unfortunately for most people, the meager savings that they acquire through their contributions may sometimes not be enough to sustain their lifestyles after retirement in Kenya.
When should you start saving for your retirement in Kenya?
For most people, saving for retirement in Kenya should come after they have settled down and are now ready to start meeting other financial obligation. The truth however is that saving for retirement should start as soon as you are employed. In the tumultuous times being experienced in the country, you may lose your job at any one time. Starting to save early is a forefront decision that should be made earlier on in time to secure your future away from the pay slips
Interest on Your Retirement in Kenya Savings Compounded!
For those lucky enough to have a personal finance adviser, they will bear witness to the fact that the advisers never tire of reminding them of the power that can be derived from compound interest. Many people however miss out on this opportunity by failing to save early. Recently there have been a lot of paid adverts reminding people of the need to start saving early for retirement in Kenya. The number of people who actually heed this advice however is quite low .Schemes approved for retirement in Kenya savings.
Retirement scheme with defined contributions
A defined contribution scheme is a type of scheme where member and employer contributions in the pension are fixed as a percentage of the pensionable earnings. In this scheme, the retirement benefit is not known in advance since it will factor in various issues including level of contributions made, charges deducted by the provider, and the investment returns of the funds upon the employee’s retirement in Kenya.
Defined retirement benefits scheme
This is a type of retirement scheme where the benefits of retirement are defined in advance. Benefits will usually depend on the years of service or final salary. The main risk in this scheme is the solvency of the employer. There is however hybrid schemes that seek to take advantage of the benefits defined in each of the above schemes for retirement in Kenya.
This is a fund that seeks to give lump sum benefits in the case of retirement of the employees leaving employment. In the case of retirement in Kenya, the beneficiary will receive a portion of their saving in lump sum on retirement with the remainder being paid out in periodical payments.
With the myriad of opportunities available for people to save as well as the much information bombarding us, there should not be any excuse why you cannot enjoy your benefits when you finally think of retirement in Kenya. Contact us for more on favorable savings plans.
It is a great honor to be invited back to speak to the now familiar leadership of World Vision.
The last time we were together I spoke on career visibility as a gateway to career growth. Today I was asked to come and speak to you about retirement. I assume the reason you have invited me is one of two ; either that one, I did a good job or two, that I did the job so poorly that you thought you might give me an opportunity to improve it! Or could it be that someone thought because I chair HelpAge International board, the leading global NGO action group on ageing, then I should know much on retirement? Either way I am happy to be here!
As I speak tonight, I will I will be speaking to myself because I recently joined the youth of old age having just turned 50.
Let me start by clarifying my use of terms and words. By retirement I do not mean a determinate date as often construed in Kenya where we have a youthful retirement age pegged at 55 years. I mean the years when your capacity to earn is diminished by reason of age or otherwise or more generally the UN agreed retirement age at 60 years.