Nairobi, Kenya: An informal pension scheme powered by M-Payment services, M-Pesa and Zap has  been launched in Kenya. It will require savings of at least Sh20 a day for informal sector players to earn a pension after their retirement.

With the individual contribution pension scheme called Mbao Pension Scheme, the informal  sector player will be

 able to save and enjoy comfort at old age, like those in formal  employment. The pension scheme, established by Kenya National Jua Kali Co-operative Society  Limited, is targeting 8.5 million people involved in small and medium enterprises in the country.

The scheme was launched days after the Government unveiled a Sh1, 500 per month sustenance  allowance for those over 65 years in 44 districts in the country. This pension scheme will  leverage on technology to attend to the expected volumes of small denominations in contribution.

In this, members will contribute through money transfer services like Safaricom’s M-pesa and  Zain’s Zap, and receive account updates through their handsets. The national identification  card number will be the member’s account number. Retirement Benefits Authority managing director, Edward Odundo, says they expect the scheme to be the largest in the country in a few years.

Speaking at the Authority’s headquarters at Rahimtulla Tower in Nairobi, Mr. Odundo says the  move will expand coverage for those who save for retirement. He says currently, only 15 per  cent of the 10 million workers in the country had enrolled in retirement benefit schemes, while 70 per cent of them without the scheme were in the informal sector.

“We are looking forward to this scheme being the largest in the country in a few years,” he  says. Insurance Company of East Africa (ICEA) is the corporate trustee; Octagon Pensions  Limited the contracted administrators, Co-op Trust Investment Services the fund managers, while the Kenya Commercial Bank is the custodian.

The Kenya National Federation of Jua Kali Associations chief executive, Mr. Richard Muteti,  says the association would eventually expand its services to the East African region.  “Contrary to what some think, jua kali has come of age and is a dignified sector that is offering most of the jobs in the country,” he says.

Mr. Titus Karanja, Co-op Trust head, merchandise investment services, says the scheme would  in future be used in the continent for those countries that wanted to expand their pension  schemes. “This is a unique venture that is not found anywhere else in Africa and we are treading on uncharted waters,” Mr. Karanja says.

 

 

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