Less than 10pc Kenyans to retire comfortably on pension
Less than a tenth of pension schemes are providing sufficient benefits to comfortably sustain members in retirement, an actuarial consulting firm says, revealing the pain retirees undergo despite making lifetime savings while employed.
According to the survey done by Actuarial Services East Africa (Actserv), retirees in defined benefit schemes have it worse than their counterparts in contributory schemes.
The firm measured the adequacy of benefits using a ratio of income after retirement to income immediately before retirement, with an ideal level between 66 and 75 percent.
The firm surveyed 85 pension schemes (53 defined contribution and 32 defined benefit schemes) finding that only nine percent met the ideal level of income replacement ratio for members.
“Of the defined contribution pension schemes in the survey only 13 percent seemed to provide adequate levels of benefits for individuals joining at age 25…while six percent of defined benefit schemes seemed to provide adequate levels of benefits.”
“For a large number of pension schemes, it would appear that members are unlikely to achieve an appropriate income replacement ratio in retirement. This would mean that members require to consider making additional savings towards retirement.”
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