KALELI: Technology key to deepening pension penetration

KALELI: Technology key to deepening pension penetration

By Bancy Kaleli

By the end of 2018, only 20 percent of Kenyan workers were enrolled in a pension scheme, according to the Retirement Benefits Authority. Industry players concur that a lot more effort is needed to increase penetration and ensure financial security of Kenyans during their retirement years.

The industry has witnessed gradual growth from holding assets worth Ksh.100 billion in the year 2000 to Ksh.1.2 trillion last year. This success has been partly anchored on use of technology to increase pension’s uptake and efficient management of retirement schemes.

The place of technology in the pension industry has been met with different views and perceptions, but the question that remains is why the industry has not fully adopted technology use yet the benefits are clear.

For pension schemes members, the benefits of technology include a much connected, direct and informed pensions experience through awareness, access to information that ultimately enables them to make much better decisions regarding their retirement. Availability of easier payment platforms also makes it easier for members to make remittances and access their funds.

For trustees, technology promises reduced cost in terms of labour, improved governance and security in record keeping and hence an enhanced member experience. For scheme sponsors, it offers accurate information in real-time that will empower strategic decision-making and more effective de-risking.

According to a publication on Technology and Pensions by OECD in 2017, innovative applications of technology for financial services are already being used to improve communication with consumers and their engagement with their pension plans.

This has seen members have accessible self-service portals; offering personal wealth management features and track records which help visualize impact of contributions and other deductions on their pay check as it provides a harnessed, precise and timely statement, this in return has led to increased consumer benefit through reduced costs and increased accessibility to pensions schemes which are integrated with mobile service providers.

With increased use of mobile money services, members have been able to access pension services with reduced transaction costs in low-income pension schemes making them more viable to users who can save for retirement with contributions as low as Kshs. 20.

Pension schemes in Kenya have managed at some point to provide a platform technologically integrated within web self-service portals, mobile-based offers, and member surveys, a fact that is driving more pension agencies in investing in a member web portal. Members find it easy to visit the online portals rather than visiting the offices of the various schemes service providers to seek clarifications and updates over their pension related issues.

Cutting-edge technology has proved to come to aid by offering proper record keeping without tampering with the computerized information available and by ensuring those who breach pensions saving laws are brought to record. In one way or the other, technology is trying to reassure confidence to Kenyans for the Pension schemes by ensuring transparency and accountability in the industry.

On security, safety data assurance will see more people feel comfortable sharing details with providers who can use their data responsibly. Kenyan millennia’s are increasingly showing a greater willingness to allow online services to hold their financial data, which represents a hopeful sign for the future of pension innovation.

The informal sector, which employs the majority of workers (83.4%), remains generally unreached by pension services. Given the low coverage, impetus to encourage take-up became profound. The Retirement Benefits Authority (RBA), working together with other stakeholders in the industry, has had to come up with initiatives to expand pension coverage through the current technology, especially to the informal sector where majority are not covered.

To transform the way Retirement Benefits industry operate and how fast Kenyans take up pension services, it will largely depend on how fast the industry is willing to fully adopt use of modern technology.

The author is Pension Consultant at Enwealth Financial Services

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