RETIREMENT BENEFITS

Octagon Pension launches a digital pension product for jua kali and youth

The product is expected to reach out to 30 per cent of informal sector and increase pension penetration in the country

In Summary

• Mobikeza will enable youth, Jua Kali artisans and workers in Micro-Small and Medium-Sized Enterprises make unlimited deposits and periodic withdrawals via USSD or an app, and hence increase savings and pension penetration in the country.

• According to RBA chief executive Nzomo Mutuku there are no enough products in the insurance and pension industries to support pension uptake, especially the Post Retirement Medical Fund.

Octagon Pension Services MD Godwin Simba, Octagon Africa Group CEO Fred Waswa (right) demonstrates to RBA CEO Nzomo Mutuku on how to use Mobikeza, a digital pension solution for the informal sector
Octagon Pension Services MD Godwin Simba, Octagon Africa Group CEO Fred Waswa (right) demonstrates to RBA CEO Nzomo Mutuku on how to use Mobikeza, a digital pension solution for the informal sector

Pension scheme, Octagon Pension Services Limited has launched a digital pension solution for workers in the informal sector.

Dubbed Mobikeza, the product will enable youth, Jua Kali artisans and workers in Micro-Small and Medium-Sized Enterprises to make unlimited deposits and periodic withdrawals via USSD or an app, and hence increase pension penetration in the country.

Currently, retirement benefit uptake in Kenya is low at 20 per cent compared to the 80 per cent coverage witnessed in the developed economies, due to the high involvement of the human capital in the informal sector.

“To boost this coverage, there is a need to focus on the informal sector. We believe that Mobikeza will address the need for a flexible and affordable product and guarantee a comfortable life after retirement,” Octagon Pension chief executive Godwin Simba said.

Octagon has invested Sh10 million in the development of the solution.

So far, 5000 people have been enrolled as Simba said they expect the number to grow to one million in the next 12 months.

The informal sector is said to constitute 35-50 per cent of the economy.

Mobikeza is anchored under the Octagon Personal Pension Scheme which is regulated by the Retirement Benefits Authority.

The solution’s platform is integrated with MPESA and the Bank’s platforms.

According to RBA chief executive Nzomo Mutuku there are no enough products in the insurance and pension industries to support pension uptake, especially the Post Retirement Medical Fund.

PMRF is a new medical fund targeting retirees for provision of healthcare upon retirement.

“We need such products to bring on-board millions of Kenyans outside the pension bracket and complexity surrounding pension schemes,” Mutuku said.

Mutuku has said the products need to be incorporated with other financial services including insurance and credit facilities.

“People in the informal sector face high shocks including medical, business and funeral shocks that may distabilise the savings for retirement plan,” he said.

According to Simba, Mobikiza will automatically enroll members for group life cover of Sh250,000 over their savings and funeral benefit of Sh25,000.

“We are also working to interface a credit bundle. However, we will have the risk of default born by the lender,” he said.

The firm is targeting to sign a non-disclosure engagement with existing mobile money lender in the market.