- Many had to pay cash for their medical bills
- 57% of them saying they had additional sources of income.
Image: MERCY MUMO
The negative economic effects of Covid -19 has seen many retired Kenyans turn to loan facilities to meet their personal needs, support families and pay for medical expenses.
Latest report by pension administrator Enwalth shows that 60 per cent of retirees saw their expenses increase with 78 per cent of them saying their expenses had increased by 11-50 per cent since the pandemic hit the country.
The main reason driving up expenses was the need to support to family members who had lost jobs or businesses.
To supplement their insufficient retirement income, the pensioners turned to Mobile app loans 26 per cent, commercial banks 23 per cent, Sacco loans 14 per cent, Chamas three per cent and other sources. The repayments and high interest rates putting a strain on their financial and mental wellbeing.
A study conducted in conjunction with Strathmore University sought to establish the effect of Covid-19 on financial and general well-being of retirees in Kenya.
It targeted pensioners from various schemes- 49 per cent of respondents were between 61-70 years, 35 per cent between 51 – 60 years and the rest either below 50 or above 70 years.
Another finding was that 41 per cent of the retirees had to pay cash for their medical bills, only 32 per cent having medical insurance and 20 per cent used National Hospital Insurance Fund (NHIF).
“There is a call for retirement benefits schemes to come up with post-retirement medical funds, where members voluntarily contribute for medical insurance in their post-retirement years,’’ the report said.
This, according to the survey would help the retirees who are highly vulnerable to diseases, especially at such a time when there is a pandemic.
On a positive note, many of the retirees indicated they had invested the money accessed at retirement, with 57 per cent of them saying they had additional sources of income. The most common sources were farming, rental income, business, consultancy, lecturing and dividends.
The highest number of respondents, up to 34 per cent, said they had invested in farming.
It is interesting that retirees form a significant portion of the population that is driving the food security agenda in the country,” said Lydia Wamalwa, business development and training officer at Enwealth Financial Services said.
He study found out that the financial challenges brought about by the pandemic will also affect future retirees.
Individual pension schemes experienced a surge in withdrawals, reduced contribution rates, which in the long run will further lower the income replacement ratios, putting future retirees at risk of lower standards of living, prolonged years in the workforce and taking riskier investments to increase the returns.
It recommends that the legislature should set-up new rules and guidelines on the taxation framework with the aim of cushioning retirees, on top of what already exists.
The researchers also suggests that the National Treasury should set up a separate emergency kitty for cushioning the less fortunate and elderly.
‘’The kitty should have an annual budget allocation and a well-defined investment structure which will see the growth of the funds. This would also help to reduce on the national debt liability,’’ the survey said.