Technology touted as a key plank in the growth of pensions in Kenya

Market players in the pensions industry have been urged to embrace technology if they are to favourably compete on the global stage.

This was revealed during this year’s Trustee Management Forum (TMF) which focused on “The Value of Proposition of Technology in the Future of Pensions.”

During presentations made during the forum, speakers noted that COVID-19 has forced the world to reset and accelerate to live differently – to learn, work, socialize, shop, worship and collaborate in different ways. It therefore means that businesses too need to harness the power of digital models to create new value and experience.

“Driven by subdued economic growth, nations have been hit by an urgent need to tackle socio-economic deficits – a realisation that we require new models of engagement that will enable us to leapfrog to the next phase of growth.

The changing social demographics globally and the disruptive change caused by COVID-19 will most likely affect investment returns and in turn push pension investing to modernize and embrace new technologies, markets, and processes,” Mr. Tom Mulwa said.

He added that for very long, the workings around saving and access of pension has been predominantly a preserve of a small segment of the population. However, some of the trends defining the current pension space include; Emerging employment dynamics, Investment choices and Management of pension funds. All these he said had a great impact on how pensions will operate in the next decade.

“We are in a situation where challenges are now twice as bad because of the life expectancy and longer retirement periods. Persistent low interest rates, which began even before COVID-19, remain a major challenge for pension funds.

This has been compounded by the continued popularity of the gig economy and informal entrepreneurship. In the long run, the traditional income replacement ratio (IRR) strategies in retirement, need to be relooked,” Mr. Tom Mulwa said.

Stakeholders stand to gain more when they invest in more structured collaborations by optimising their operations. Efforts geared towards devising common approaches to macroeconomic policy, savings culture, and effective management of shared resources for sustainable poverty reduction are a sure way of ensuring the transformation of the pension industry.

To achieve this, the use of technology and data will come in handy as it is considered as an incredibly powerful tool not just in deciphering data, but also in helping people understand the risk in their portfolio and modelling their portfolios and strategies that supports flexibility, optionality, and interoperability.