RBA fears massive benefits erosion

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RBA fears massive benefits erosion

Retirement Benefit Authority (RBA) chief executive Nzomo Mutuku. FILE PHOTO | NMG 

Kenya could witness massive cash withdrawal from pension schemes holding Sh1.3 trillion as savers face lay-offs owing to coronavirus-related hardships.

Retirement Benefit Authority (RBA) chief executive Nzomo Mutuku expressed fear that gains made growing savings from a paltry Sh600 million two decades ago risked being reversed as retrenched workers seek savings to fund day-to-day expenses.

“The unprecedented human, economic and social costs are now being felt in various segments of the Kenyan economy. “More severe effects are expected in coming days where the Kenya’s economic growth figure for 2020 was revised from a baseline estimate of 6.2 percent to possibly 3.4 percent as reported by the Central Bank of Kenya on March 23, 2020,” he said. In a communique to 1,287 pension schemes, the RBA chief said it had reviewed reporting regulations to ease the schemes’ pain by deferring submission of audited financial results by sixty days—after listed firms were given similar extension.

“The authority has requested Treasury secretary Ukur Yatani to consider gazetting a waiver of penalties accruing from late submission of audited financial statement that are due on March 31, 2020 for a period of sixty (60) days,” he said. RBA said all annual delegates and trustees meetings had been deferred with face-to-face meetings outlawed in favour of e-meetings.

Mr Mutuku said with financial markets expected to experience unprecedented turbulence, most schemes will experience loss of significant value of investments made at the bourse. This will impact investors in the financial markets including pension schemes. In addition, a number of employers have closed operations or laid off staff, which will also impact on pension contributions and withdrawals.


For schemes whose financial year ended on December 31, 2019 and had have not finalised audited financial statement, retirement benefit levy due on April 30, 2020 will be paid based on the last audited accounts as at December 31, 2018 with any resultant underpayments being settled without attracting penalties while overpayments will be refunded or credited against future levy.

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