This archive report was first published on 28 August 2019.
On August 28, 2019, Octagon Pension Scheme made a significant move in the pension industry by launching a digital pension scheme, dubbed MOBIKEZA, to cater to the youth, JuaKali artisans, and workers in Micro-Small and medium-sized Enterprises (MSMEs) in Kenya.
The innovative product allows contributors to make unlimited deposits and periodic withdrawals via USSD or an app, providing a secure and convenient way to save for retirement.
According to the Retirement Benefits Authority (RBA), only 20 percent of Kenyan workers are enrolled in pension schemes, with the informal sector constituting 80 percent of the workforce. This low pension uptake has been due to the unaffordability of pension plans for workers with uncertain incomes.
Octagon is leveraging technology to disrupt the pension market, which has low uptake in Kenya compared to other nations. The company aims to increase pension coverage, which is currently at 20 percent, compared to 80 percent in high-income economies.
With the growth of Mpesa, mobile penetration has allowed FinTechs to disrupt the industry, making it easier for people to transact on an app and link it to Mpesa, reducing cybersecurity risks and allowing real-time processing, deposits, and withdrawals.
MOBIKEZA customers can monitor their daily, monthly, and annual yields, boosting savings to guarantee a comfortable life after retirement.
As part of the Retirement Benefits Authority's five-year plan, RBA's CEO Nzomo Mutuku asked pensions schemes to offer tax incentives on savings and link Independent Pension Plans (IPP) to their website to increase enrolment.
