Chairman and Board Members, Octagon Pension Services,
Group CEO, Management and Staff, Octagon Pension Services,
Representatives of Alexander Forbes Financial Services
Ladies and Gentlemen,
I’m glad to be here on this auspicious occasion marking one of our service providers’ entry into a global partnership. This is indeed a clear testament that a business that is focused and innovative will definitely be rewarded. Founded 13 years ago, Octagon Pension Services has been a key player in Kenya’s pensions industry and as it embarks on its second decade, it has grown beyond Kenya and East Africa. Along with this phenomenal growth, the company’s innovation has seen its pension products support the Retirement Benefits Authority in developing retirement benefits industry.
Ladies and Gentlemen, Octagon is among service providers who promptly adapt to the changing market. When we brought in Post-Retirement Medical Fund, Octagon was ready with their Afya Plus Post-Retirement Medical Cover. It provides a medical cover to a member and their loved ones after they retire from active employment.
Thereafter, taking cognizance that 80 per cent of the country’s total labour force who are in the informal sector are excluded from any form of pension plan, we launched our RBA Strategic Plan 2019-2024 with a focus on of bringing more workers in the informal sector under a retirement benefits scheme, and soon afterwards Octagon launched its digital pension scheme Mobikeza.
Meanwhile, Octagon has also continued to look beyond our borders. It is becoming increasingly obvious that for a business to tackle emerging challenges it has to look for businesses with common thinking to work with. I commend Octagon for embracing this globally acclaimed strategy of creating and joining collaborative initiatives. After you bought into a pension administrator in Zambia you are now embarking on the next phase of growth through a global strategic business partnership with Alexander Forbes Financial Services who have satisfied themselves that you were the best fit for their business.
We are gratified to note that on the other side of this partnership are Alexander Forbes Financial Services who are a making a comeback to the country. We welcome you back to the country and look forward to you infusing global best practices and innovation leveraging on your experience in other jurisdictions.
Ladies and Gentlemen, this strategic partnership is coming at a time when the retirement benefits industry has proved resilient despite a challenging economic environment. Retirement benefits assets increased from Kes1.16 trillion in December 2018 to Kes1.32 trillion in December 2019 despite a number of economic shocks during the year. Meanwhile I am pleased to announce that pension coverage has risen to around 22 percent of the labour force at the end of 2019 up from 20 percent in 2018. This is on the back of the launch of several new pension products targeting the informal sector including the aforementioned Mobikesa and others by a number of players including the National Social Security Fund (NSSF). This affirms that we are well on our way towards achieving our Strategic Plan objective of increasing pension coverage to 30 percent of the labour force by 2024.
On our part as RBA we have continued engaging informal workers by visiting them in markets in at the county level accompanied by Individual Pension Plan providers who can register members on the spot. As a culmination of the these activities, I am pleased to announce that we shall be having a major event, the Retirement Benefits Open Day, in Kisumu City on March 24th to 26th, 2020 where we expect to bring all pension stakeholders under one roof with an emphasis on expanding pension coverage to the informal sector. At the same time we are also targeting professions that are mostly one or two-person led, many of whom have not be saving for their retirement. It was with a lot of satisfaction that after years of discussions we finally licensed a pension scheme for lawyers through their welfare society. We are in discussions with other professions including journalists and we hope to also license schemes for these groups in the coming weeks.
Ladies and Gentlemen, the Authority continues to supervise the industry through a Risk Based Supervision (RBS) approach. Following the launch of our new RBS toolkit in 2018, we are able to score all the schemes we regulate between 1 (very low risk) and 5 (extreme high risk). I am happy to report that we continue to bring the average overall risk score for the retirement benefits industry downwards. However, one of the upward pressures on the risk score in a number of schemes, particularly in the public sector, is coming from the continuing challenge of unremitted contributions. This is of particular concern in state corporations in the education, sugar and retail sectors. The Authority, therefore, welcomed with appreciation the recent directive from the Cabinet Secretary National Treasury that state corporations must address unremitted statutory contributions by the end of the current financial year.
The Authority also continues to implement the Guideline on Governance for retirement benefits schemes following its gazzettment in 2018. Implementation of this guideline will work to strengthen the governance of schemes and reduce the risk rating for the industry while going hand in hand with the roll out of the new and improved curriculum for the Trustee Development Programme of Kenya (TDPK) which commenced in January 2020. We are currently undertaking countrywide sensitization of the governance guideline as well as the one on Treating Customers Fairly (TCF) which was recently approved by the National Assembly. Later this year we shall also be gazzetting a guideline on remuneration, which has been a long contentious issue between members, trustees and service providers.
On the policy side, we are currently in the middle of public participation for our policy proposals that we hope to forward to the Cabinet Secretary National Treasury for consideration during the 2020/21 Budget process. This public participation process which is going on countrywide, includes the Umbrella Retirement Benefits Scheme Amendment regulations which were previously annulled by the courts on grounds of inadequate public participation, the legal notice on preservation of benefits and creation of reserves which was annulled by the National Assembly on the same grounds as well as a number of exciting new proposals.
Meanwhile, Ladies and Gentlemen, the Authority continues to receive global recognition and accolades. Following our appointment as Interim Chair of the African Pension Supervisors Forum late last year we have recently also been elected to the Executive Committee of the International Organisation of Pension Supervisors (IOPS).
Ladies and Gentlemen, as I conclude, let me reiterate that this move toward partnership is encouraging. I urge you to continue being innovative and I pledge that RBA will continue supporting initiatives geared to development of the retirement benefits industry. Once again congratulations to Octagon and Alexander Forbes. I look forward to celebrating more milestones with you.