A Kenyan state-owned pension fund on Wednesday called on Kenyans to embrace the saving culture in order to enhance their social security space upon giving up work.
CPF Financial Services, a retirement benefit scheme administrator, which manages a pension plan that covers the country’s 47-county government employees, said it is better to be penny-wise in youthful life but enjoy life in old age.
“In the course of my working tours around the world, Chinese have emerged as the most frugal people in the world who save up to about 50 percent of their monthly income to cushion them in old age upon retirement,” the firm’s CEO Hosea Kili told journalists in Nairobi.
Kili said Kenyans should embrace the saving culture and desist from using their children as security in old age because their offspring also face own challenges and might not offer the requisite assistance.
Last year, a report prepared by the World Bank reveals that the low level of savings in Kenyan households is not only low and declining, but are also lagging behind other economies in the region which are less economically endowed.
In the 1980s, the report adds, the savings rate was higher than in Senegal, Ghana, Uganda and Tanzania but the Kenya stagnated in the last three decades, which allowed the rest to catch up and surpass it.
Kili called upon the government to make compulsory saving mandatory through legislative means like taxation, adding that tangible development cannot be realized without saving.
He said Kenya’s pension scheme is worth 10 billion dollars but has the potential to go up to 100 billion dollars if the scheme is managed prudently.
A report prepared by the Kenya Deposit Insurance Corporation (KIDC) during the same period revealed that more than nine in 10 account holders in the country hold less than 1,000 U.S. dollars in their bank accounts and that 96 percent of Kenya’s 31 million bank accounts hold deposits that can be withdrawn at any time.