- The country’s population aged 65 years and above has had a year-on-year upward trajectory since 2011.
- This from 1.95 per cent in 2011 to 2.6 per cent in 2021 with expectations that it will continue rising.
Today’s retirement and pension plans were not designed for the current reality of people living longer and healthier lives, the World Economic Forum says.
The lobby notes that the traditional three-stage life of school, work and retirement no longer functions in an age of unprecedented longevity and shifts in work and health outcomes.
It, therefore, urges nations to disrupt the current approach to retirement savings in a move to address gender disparities and the changing needs of older workers, as well as the growing number of gig workers.
“Many people will want to work past mandatory retirement age because they will live for another 20 to 30 years, while others will need to work longer to remain financially resilient in later life,” the lobby says
“For instance, as societies continue to age, with many women living longer than men, new ways to deal with the retirement savings gap will have to be created.”
A study from Alliance for Lifetime Income (ALI), an insurance and investment group, that produced a state of women 2022 report notes that women tend to live longer than men, meaning they have to spread their savings thinner to accommodate their needs in retirement.
“While some women will work longer to bridge the gap, it's no surprise that when given the opportunity, most people opt for retiring when they can as opposed to continuing to work,” the report reads in part.
To echo the unprecedented longevity of life prediction by the lobby, is the age structure data by Statista which shows that the country’s population aged 65 years and above has had a year-on-year upward trajectory since 2011.
This from 1.95 per cent in 2011 to 2.6 per cent in 2021 with expectations that it will continue rising.
Currently in Kenya, the statutory retirement age is at 60 years for public officials while that for persons living with disabilities is 65 years.
The need to reconsider the social security funding structure as stated by the international lobby, is thus, inevitable and it is mirrored in President Ruto’s plan to overhaul the National Social Security Fund (NSSF) structure.
The plan points towards efforts to match contributions towards retirement savings by about 50 per cent.
According to Ruto, the new framework will see the government contribute up to a maximum of Sh3,000 per year on savings per person covered in the new structure, or an equivalent Sh250 per month.
The structure seeks NSSF contributions to be increased from the Sh200 flat rate to six per cent of workers’ monthly salaries.
It is a move that has had backing from the Central Organisation of Trade Unions (COTU).
The union termed the current structure as critically inadequate and the lowest in East Africa.
In Uganda, the structure stipulates that the employer must deduct five per cent from the employee's total gross monthly wage and add 10 per cent of the total gross monthly wage, making a total contribution of 15 per cent for each employee.
Tanzania’s fund requires every registered employer to remit 20 per cent of the employees’ wage as a joint contribution between the employer and employee.
It further stipulates that the rate of employee’s share should not exceed 10 per cent of his monthly wage under the arrangement of 10 per cent employer, and 10 per cent employee, or 15 per cent employer and five per cent employee.
However, the employer still may opt to remit the whole 20 per cent without deducting it from employees’ wages.
With the declining birth rates around the world, it means that there are currently more people over the age of 60 than children under the age of five..
According to World Health Organisation, over the next 30 years, the proportion of the world’s population over 60 years will nearly double from 12 per cent, to 22 per cent.