Kenya’s millennials are creating their paths, building careers, and dreaming of bright futures. As they come of age, questions about their readiness for retirement is overlooked. With the changing economic landscape and the cost of living escalating, retirement planning might be the last thing on this generation’s mind. However, amidst these changes, it’s crucial to assess whether Kenya’s millennials are adequately prepared to retire comfortably when the time comes.
According to the 2022 KNBS FinAccess survey, more than 10 million Kenyans face a retirement crisis as they fall short of adequate savings once they leave work while that less than 10 per cent of millennials retire financially independent.
Retirement readiness among millennials in Kenya is a complex issue influenced by various factors, including financial literacy, employment trends, savings habits, and access to retirement plans. Many Kenyan millennials lack the necessary knowledge and skills to effectively manage their finances, plan for the future, and make informed decisions about retirement savings.
Employment trends and income instability present significant hindrances to retirement preparedness among Kenya’s millennials. Many young adults are coping with unstable employment situations, including part-time work, and short-term contracts, which offer limited opportunities for retirement savings. Additionally, stagnant wages and rising living costs make it challenging for millennials to set aside funds for retirement amidst competing financial priorities.
Access to retirement plans and pension schemes remains limited for many Kenyan millennials, particularly those employed in the informal sector. While formal sector workers may have access to employer-sponsored retirement plans, such as the National Social Security Fund (NSSF), informal sector workers often lack awareness on how to access to such benefits, leaving them vulnerable to financial insecurity in retirement. Therefore, there is a need to create awareness on pension schemes being offered by private insurance companies.
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 and Individual Pension Plans. An individual pension plan is a saving product that one can personally set up to save money for retirement
The 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 persons. For instance, with as low as KShs500 per month you can join the CIC Jipange plus personal retirement scheme and start your journey to financial freedom at retirement.
The schemes are registered by the Retirement Benefits Authority. Schemes also have an option of registering with the Kenya Revenue Authority for purposes of tax incentives accorded to participant of such schemes. Saving in a registered retirement benefits scheme ensures that your savings are exempted from taxation as per the set limits. Anyone over 18 years of age who is either employed or self-employed can join an individual pension scheme by filling a simple application form and making your first contribution.
Retirement readiness among Kenya’s millennials is a pressing issue that requires attention from policymakers, employers, and financial institutions. By addressing barriers to financial literacy, promoting access to retirement savings options, and fostering a culture of saving and investing, millennials can retire comfortably and enjoy their older years.
For any queries on retirement insurance, feel free to contact us on 0703099120.
