NSSF eyes 1 million new savings accounts after digital switch

The National Social Security Fund (NSSF) has set targets on raking in one million individuals into retirement savings through its recently launched informal-sector tailored savings platform.

To hit the milestone, the State agency is leveraging on organized informal groups such as traders and digital taxi/bodaboda operators to grow scheme contributions with the ultimate goal of pulling in the expansive informal sector in the long-term.

“Our target is to bring in one million new members by 2020 at the minimum. There also exist an opportunity of bringing on board over 17 million people in the long-run,” NSSF Managing Trustee Anthony Omerikwa said.

Launched on November 15, the savings plan seeks the minimum contribution of Ksh.25 per person with individuals being allowed to withdraw an equivalent 50 percent of the net sum saved after five years.

The platform serves to respond to Kenya’s lagged savings rate while giving option to the pension less informal sector to save for retirement.

Data from the Kenya National Bureau of Statistics (KNBS) indicates that the country’s household saving rate was at 11 percent as of 2014 and has lagged between 10 and 14 percent from 2010 to 2014.

More than three quarters of Kenyans fail to hold a substantive retirement plan throwing their financial independence after working years into doubt.

The targeted subscriptions, once reached will serve to prop up NSSF’s assets under management from the current hold of Ksh.1.2 trillion as of December 2018.

The agency holds a paltry Ksh.83.98 billion for internal revenue generation while holding the lump sum Ksh.125.91 billion through external managers.

At the end of 2017, NSSF’s net return on net investment grew to Ksh.20.4 billion having seen an increase in net scheme funds by Ksh.23.9 billion.

The agency is however expected to face stiff competition in the battle for clients’ funds as players in financial services wage war on deposits.

Investment firms have largely upped the ante by offering returns above the market average to beat the return from commercial banks and fixed income streams.

latest stories