Gov’t to harmonize National Pension Policy

The Retirement Benefits Authority (RBA) is working on harmonizing the National Pension Policy.

Speaking in Kwale during the Alexander Forbes Annual Retirement Conference, RBA’s Chief Executive Officer Dr. Edward Odundo urged Kenyans to participate in the initiative that is being driven by the Treasury.

“Every Kenyan should participate on this policy which Treasury is driving. In the long run, we should have a good retirement benefit sector,” he said.

Dr. Odundo noted that the pension scheme has seen a growth of almost Ksh 50 billion in the last ten years to Ksh 900 billion currently.

He was optimistic that before the end of this year, the scheme would have hit a trillion mark and remarked that only ten per cent of this can do remarkable work to the country’s economy.

“If you take ten per cent of a trillion it is big growth that can even fund institutions like Thika Super Highway locally,” he said.

The CEO added that at the moment the sector was focusing on tax harmonization and portability of pension industry and investment guidelines so that people in East Africa can operate smoothly from one country to another.

He said that the seminar has come at the right time when the country is currently discussing matters on private equity and investment.

“Trustees don’t understand what private equity is or what alternative investments are available because they are used to traditional investments,” he added.

He encouraged Kenyans to invest in Private equity specifically in energy, infrastructure, communication and even housing.

He assured that they can fund a number of low cost housing using pension funds as long as it’s well-structured.

On his part, Sundeep Raichura – who is the group CEO for Alexander Forbes, said there is a growing interest amongst pension funds to diversify from mainstream asset classes and include alternative investments in their portfolios.

“Some of these reasons include the need to improve risk return equation and introducing in our investments portfolios asset classes that are less correlated to the traditional asset classes,” he added.

He added that most Kenyans are not getting sufficient benefits from the pension plan and the government should encourage people in terms of taxes and saving through pension.

“Currently there is a limit on tax allowance contribution to pension plan and that limit has been Ksh 20,000 for the last 10 years,” said Raichura.

He noted that inflation has eroded the Ksh 20,000 over the ten years and there is need for the limit to double.

The seminar seeks to help trustees gain the knowledge and practical insight of asset classes that they believe can no longer be ignored as part of their investment strategy.

By Lawrence Nganga