This archive report was first published on 12 May 2020.
The Kenyan pension industry is facing a crisis as companies suspend pension contributions, leaving thousands of workers with reduced retirement incomes.
On April 23 this year, the Retirement Benefits Authority (RBA), the pension industry regulator, sent out a notice allowing cash-strapped firms reeling from the Covid-19 pandemic to discontinue or suspend contributions until the crisis diminishes.
According to RBA Chief Executive Officer Nzomo Mutuku, a number of companies have applied for suspension of pension contributions, with some coming from the hardest hit sectors such as hospitality, aviation, and manufacturing.
Media companies too have joined the fray, with the suspension periods varying from a few months to up to nine months.
The situation for retirees has also been exacerbated by proposals published last week in the Finance Bill 2020, seeking to tax monthly or lump sum pension emoluments for persons aged 65 and above.
The Finance Bill has also not spared the Sh251 billion National Social Security Fund (NSSF) that safeguards retirement cash for millions of Kenyans.
The RBA notice allowing suspension of contributions, and the havoc visited on investments made by pension schemes by Covid-19, have all rattled the Kenyan pension industry.
Pension assets under management stand at Sh1.2 trillion, and experts in the pension industry warn that their value will be impacted by the slowdown caused by the pandemic.
According to Octagon Pension Services Managing director Godwin Simba, the economic slowdown has hurt many employers' revenue, which is in turn putting the retirement security of most employees in jeopardy.
Simba noted that the pension industry would see a decline as a result of the pandemic, owing to its huge investments.
However, Mutuku differed with Simba, asserting that the suspension of contributions would have a minimal impact on the pension industry, because the biggest pension schemes were in the more resilient sectors such as finance and banking which are weathering the crisis.
