Regulators to set up a pension solutions sandbox to test market viability

Financial service regulators plan to set up a pension solutions sandbox that will test and approve their viability in the market.

Retirement Benefits Authority Chief Executive Officer Nzomo Mutuku says there is need for innovation to enhance pension uptake especially among those in the informal sector unlike the current pension plans that are mainly designed to cater to the formal sector in terms of access and contribution amounts.

Over 10 million Kenyans do not have any arrangements to save a portion of their income and most of these people are members of the informal sector which commands 83 percent of the country’s labor force.

Despite the growth registered in the pensions industry, one of the major challenges facing the industry is convincing Kenyans to enroll in pension schemes.

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This has prompted the Retirement Benefits Authority to plan the setting up of a sandbox whose aim will be to encourage development of macro-pension solutions to boost pension uptake.

Most of the pension products in the market are mainly designed to cater for the formal sector hence the call by experts for innovation to accommodate the informal sector.

The 1,200 registered pension schemes in Kenya has mobilized 1.2 trillion shillings in assets.

However, this represents about 20 percent of the working class who have pension plans.

Firms such as Octagon Pension Services Limited hope that using mobile apps will help boost uptake of pension products.

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