Saving culture: Are you building your nest egg?

For nearly six decades, the National Social Security Fund (NSSF) has been an important component of social protection in Kenya as a contribution scheme that provides social security benefits to its members and their dependents once they reach retirement age.

However, the FinAccess Household Survey Report 2021 indicated that only 10.6 percent of households in Kenya have access to retirement services, including national social security.

This means that 89.4 percent of Kenyans lack a financial nest for their retirement, which poses a risk of old age poverty.

Moreover, a 2021 study by FG ​​Hermes reports that Kenya has a savings rate of 12 percent which is well below the African average of 17 percent.

The country is also far behind the 30 per cent target as envisaged in the Kenya 2030 vision blueprint.

With uncertain economic conditions still emerging, now more than ever, it is time that we as Kenyans start planning for the future.

The devastating impact of Covid-19 shocks on livelihoods has highlighted the importance of savings and investment.

Savings provide a safety net for unexpected expenses. Whether it is a medical emergency, car repair, or unexpected job loss, having a savings fund gives one peace of mind knowing there is a cushion to fall back on.

In the last years of work, when one realizes the importance of retirement privileges and even more so when retiring, it means the culture of saving, and even more so the creation of a pension fund is very beneficial.

Pension funds are retirement arrangements designed to help individuals build a nest egg for their golden years.

While it may be tempting to put off saving for retirement until later years in life, the earlier they start, the better they will be in later life.

Most people will spend at least 20 years in retirement, and with the high cost of living, it’s crucial to have enough savings to draw on during your golden years.

With the number of retirees increasing each year, ensuring that people have adequate financial resources in their younger years has become a primary responsibility of individuals, governments, and corporations alike.

Instilling a culture of saving requires a shift in mindset and behaviour.

There is a need for dialogue and public education about the benefits of saving through registered pension funds.

By fostering a culture of saving, we can ensure a brighter financial future for ourselves and future generations.

Mr. Minga is the General Manager, Department of Life and Pensions, Mynet Kenya.