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• UPDATE ON FINANCIAL EDUCATION CAMPAIGNS
• A PRESENTATION BY
• EDWARD ODUNDO
• CHIEF EXECUTIVE OFFICER
• MENA WORKSHOP ON PRIVATE PENSION REGULATION AND
  SUPERVISION

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AGENDA

• Location of Kenya
• Kenyas Retirement Benefits Structure
  Membership
• Current status of Pensions Coverage and
  Replacement Rate
• Attitude and Perception towards Retirement
• Pension Education Campaigns
• Challenges
• Way Forward

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Location
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Kenyas Retirement Benefits Structure Membership

• The Civil Service Pension Scheme 22
• Non contributory Unfunded
• Covers all service employees
• Exempted from Retirement Benefits
• Authority Supervision
• Legislated by Act of Parliament

• National Social Security Fund (NSSF)-67
• Provident Fund
• Contributory funded (both employee
• and employer)
• Accounts for 28 of total industry assets
• Covers all employer with 1 employees
• Regulated Supervised by RBA

• Private Occupational Schemes 11
• contributory funded
• Accounts for 70 of Industry Assets
• Covers employees of the employer
• Regulated Supervised by RBA
• Legally formed under trust deed
• 1282 schemes (Estimated membership
• 400,000)

• Individual Retirement Benefits Schemes-0
• Contributory funded
• Open to all - formal informal workers
• Regulated Supervised by Retirement
• Benefits Authority
• Legally formed under trust deed
• 20 Individual Retirement Benefits
• Schemes Estimated membership15000

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Current status of Pensions Coverage and
Replacement Rate

• Pension saving is a voluntary exercise and not
  mandatory
• No universal pension Pilot cash transfer
  programme targeting senior citizens (over 65
  years) introduced in 2009
• Only 15 of the workforce is covered (mostly in
  the formal sector)
• Plans underway to reach the more than 80 that
  was not covered (informal sector )
• Low replacement rates (at 20) people not
  saving enough to increase income replacement
  ratios at retirement

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Attitude and Perception towards Retirement

• The concept of retirement (to many) does not
  involve pension schemes (mainly associated with
  savings for assets - house, land, cows etc)
• Perception problem
• Suspicion that scheme providers may collapse with
  members savings or may just refuse to allow them
  access to the savings
• Employers responsibility to drive the pension
  agenda
• Retirement is too far away so why worry about it
  now?
• Culture
• Traditionally children take care of
  Parents/elderly
• Stigma associated with retirement feared, even
  dreaded. Considered untrendy avoided by the
  young. Society not retirement friendly

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Pension Education Campaigns

• RBA has adopted a Multi-faceted approach to
  pension education
• Some of the Education Platforms leveraged
  include
• Public Education campaign
• Trustee Training
• Retirement Planning Seminars
• Open Day
• Media Education
• Road Shows
• Trade Fairs
• Financial Education School curriculum In
  progress

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Public Education Campaign

• Public Education Campaign is one of the key
  activities undertaken by the Authority. Three
  campaigns have been carried out in the past.
• These campaigns were aimed at
• Demystifying the Pension subject
• Educating the public on the Role of RBA
• Arousing curiosity about pensions by sensitizing
  the public on pension matters to change
  perceptions and influence behavior
• Inculcating a saving culture in Kenyans by
  starting them early on the path to saving for
  retirement.
• Encourage employers to offer retirement savings
  programs for their employees.
• RBA is developing a Call to Action campaign
  that will cause Kenyans to sign up for pension
  plans. This campaign will be developed in
  partnership with media houses to influence local
  TV content

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Public Education Campaign The Questions
Campaign April 2009 June 2010
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Trustee Training Seminars

• RBA runs a Trustee training programme targeting
  individual trustees at no cost to schemes to
  improve scheme administration and enhance the
  sectors growth through improved governance.
• One day curriculum covers the following topics
• The general role Responsibilities of Trustees
• Compliance requirements
• The role of Trustees in Investment of retirement
  Benefit Scheme assets
• Taxation
• National Insurance Hospital Fund products
• Groups exercises
• Majority of participants are1st-time participants
• To date, all the 1300 registered schemes have at
  least one trained Trustee
• Trustee training available to all schemes
  irrespective of compliance status
• Development of a Trustee Training Certification
  Programme in collaboration with College of
  Insurance, Humber Center for Employee Benefits,
  Canada and Association of Retirement Benefits
  Schemes (ARBS) is in progress to be launched in
  June 2011

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Retirement Planning Seminars

• Previously Pre-retirement seminars targeted
  scheme members 50 years and above. The seminars
  have since been renamed Retirement Planning
  seminars with no age limit
• Objective
• To equip members with investment and social
  skills to help them cope with life in retirement
• Key Topics
• Testimony from a retiree
• Benefits
• Time Management
• Attitudes to retirement
• Investment Personal Financial Management
• Health Issues in retirement

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Challenges

• Increasing coverage in an environment where
  Retirement Saving is voluntary
• Revocation of the Preservation Rule has unlocked
  the Employers portion of benefits allowing
  members to withdraw 75 of their benefits before
  attaining retirement age
• Competition from other saving options offering
  more attractive products i.e. Cooperative
  Societies, Bank Savings Accounts, Property,
  Equity, Investment Groups, etc
• Changing the orientation of Kenyans from a
  spending culture to a saving culture

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Way Forward

• Intensify efforts to increase awareness levels on
  the need to save for retirement using
• Mass Media
• Vernacular FM Radio stations with regional
  captive audience
• TV Programming to influence content
• Print Media through a pension column
• Demonstrate value for saving through a Pension
  plan using clear illustrations that show benefits
  that will be derived from long-term saving using
  a pension calculator
• Partner with Ministry of Education to introduce
  financial literacy curriculum in schools to
  inculcate a saving culture in children at an
  early age to change attitude and shift
  orientation from that of a spending culture to a
  saving culture
• Build Media partnerships to enlist their support
  to amplify messages on pension issues with a view
  of reaching targeted segments across the various
  platforms
• Continue to lobby Government to make pension
  saving compulsory

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Thank You
Asante Thank you Edward Odundo, MBS Chief
Executive Officer Retirement Benefits
Authority P.O. Box 57733, Nairobi, Kenya Web
www.rba.go.ke