Employers have suspended a total of Sh2.1 billion in contributions to pension schemes since March as companies took advantage of the Retirement Benefits Authority (RBA) authorised payment holiday to maintain their cash flows.
RBA chief executive Nzomo Mutuku, speaking in a webinar, said the pandemic had weighed down the industry’s long-term assets and cash deposits that stand at Sh1.3 trillion.
RBA in April introduced temporary relief measures that allowed cash-strapped companies to apply for discontinuation of employer-retirement contributions to pension schemes until the coronavirus pandemic eases.
The Covid-19 crisis has seen businesses announce layoffs, send staff on unpaid leave while others reported steep reductions in revenues, resulting in interventions by the government and regulators.
The unpaid benefits to the schemes could rise with the continued slowdown in business activity, with growth only expected to come gradually as the pandemic persists.
“The retirement benefit business has been adversely affected. Employers have taken a holiday from payment while members have withdrawn money provided by the law,” Mr Mutuku said.
He, however said withdraws were low as most businesses have not closed permanently but strive to sustain operations on low costs.
The authority has been anticipating a massive withdrawal from pension schemes over job losses as members try to cushion themselves from coronavirus-related hardships.
The authority had also amended regulations allowing members of schemes to access up to 40 percent of their savings to buy a home.
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