Feature: Kenyans strive to promote saving culture

Experts suggest that Kenyans save more, following a survey that indicated most senior citizens face hardships in their old age.

Only five percent of Kenyans can afford a comfortable retirement free from financial distress thanks to progressive savings made during the days of active working, according to findings on performance of pension schemes in Kenya by Alexander Forbes Group Holdings, a South Africa-based financial services provider.

The survey examined the status of retirement benefits and savings culture among workers in both public and private sectors.

The 2015 Deposit Administration Survey further indicated that 40 percent of Kenyans cannot abandon work even in their old age because they don't have retirement savings to survive on.

However, financial and economic experts say the old can enjoy their lives if they practice prudent financial management.

"Even those who live from hand to mouth can save," said Professor George Gongera, an expert in human resource development and macroeconomics in an interview on Sunday.

Retirement Benefits Authority (RBA), a government corporation which regulates pension schemes in the East African nation, said that 15 percent of the employees in the formal workforce are covered with retirement benefits under the National Social Security Scheme (NSSF) staff with the retirement scheme.

But this kind of arrangement disadvantages the more than 70 percent in informal employment whose earnings are irregular and hence making it difficult for them to register for an occupational scheme as stated in its report "Individual Retirement Benefits Schemes in Kenya".

Gongera, also Dean of Faculty of Co-operative and Community Development at Co-operative University College of Kenya, said jobs are not meant to earn a worker huge amounts of money to save but they are avenues for accessing opportunities to make money.

"A job assists you to secure credit and invest. That is saving for the future," he said.

Making a critical consideration of one's needs against earnings to eliminate wastage is an effective way of avoiding poverty in the old age, he said.

"At an individual level, consider your marginal propensity of income, marginal propensity of spending and the marginal propensity of saving. That means having a look at what you earn, consume and commit to the future. That requires a change of attitude and character," he said.

A working individual either in the formal or informal sector should be able to save at least 15 percent of the income to secure a comfortable life upon retirement, he said.

Dickson Ongaga, a financial consultant recommended the idea of saving in investments rather than locking money in fixed accounts.

He said while pension schemes offer a good alternative to saving for the future, investing in high value products would bring more returns to free one from financial dependence in the future.

"Saving is no longer about locking money in a bank account and going on a honeymoon that all is well. It is about diversifying your retirement products to ensure you have a balanced account of future savings," he said.

"Apart from liquid cash in the form of pension, you can have a house here, a land there or even a cow. It's all about well-thought choices." Endit