Liberty Life Assurance Kenya Limited has introduced a retirement benefits solutions for retired Kenyans who want flexible income and death benefits without the risks and costs associated with self-investment.
Liberty’s new retirement investment solution, a flexible income drawdown named Boresha Ustaafu offering a flexibly managed income to suit the changing needs of retirees is available to individuals aged 50 years and above and allows for ad hoc payments of Kshs 300,000 or more in addition to the minimum single purchase amount of Kshs 2 Million.
Under this new product the funds received from the customers will be invested into either the conservative or balanced portfolios offered by the company. These two portfolios are characterised by low risk while giving stable investment returns.
The product is registered by the Retirement Benefits Authority, following an amendment to the Retirements Benefits Act to allow for Income Drawdown annuity as an alternative to guaranteed annuity.
The minimum drawdown period allowable is 10 years from the commencement date of the plan, after which a retiree can choose to continue with the investment, use the investment value to purchase a guaranteed annuity or convert it into a lump sum that the member can withdraw.
Speaking during an event to unveil the product, Liberty Life Managing Director, Abel Munda said that the product is informed by research on retiree’s needs for retirement solutions that can earn them good returns in their retirement.
“This product offers an alternative to guaranteed annuity with flexibility for one to choose where they want their funds invested”, said Munda.
According to the 2019 FinAccess survey which shows a drop in the share of Kenyans saving for retirement, one in four (23 percent) Kenyans age 16 and above save for old age, a decline by half from two in five (44 percent) in 2016.
The National Social Security Fund (NSSF) Act 2013 enacted by parliament will increase the number of people saving for retirement and grow contributions to the retirement benefits schemes. The conversion of NSSF from a provident to a pension fund will also increase demand for retirement products that are more flexible with good returns.