The CEO of the National Pensions Regulatory Authority, Mr. Hayford Attah Krufi has intimated that the tier 3 pension scheme is operational but the rate at which it is working is very slow.
According to Mr. Attah Krufi, although 85% of the population in the country is in the informal sector, few of these individuals are in the private pension scheme.
Speaking in an interview on PM Express, Mr. Hayford Attah Krufi acknowledged that, the micro pension policy put in place by the National pensions Regulatory Authority will support the informal sector.
“We as an authority has put in place micro pension policy to support the informal sector. The micro is a small scale personal scheme group and anybody who want to contribute can do that. The amount is not defined and people can pay as low as Ghc2; it should be based on what you can afford and this small amount will give you the return and the retirement benefit”.
Mr. Hayford Attah Krufi explained that self-employed individuals and individuals who are in employment can make Tier 3 voluntary contributions.
“Even the armed forces personnel excluded by law from paying pension, are entitled to make a contribution when it comes to the tier 3 pension schemes”.
60% of individuals in the country in the informal sector are those who have money, he stated, but their contribution to tier 3 is very slow. According to him, private pension in the informal sector has been expected to be the biggest but that is not the case.
Additionally, he added their negotiation with the MTN in bringing the switch will capture everyone in a module which will help get information of the individuals. He also acknowledged mobile money to be the drive in the informal sector in Kenya.
“What makes the pension scheme of the informal sector difficult to operate is the time to get their personal information. People don’t have time for that but once you are in employment all this data is captured. So this makes the running of the pension scheme in the formal sector far easier than in the informal sector”.
As explained by him, the contribution in the pension scheme has been divided into 2 categories which are the savings and the pensions as per the duty of the law for the informal sector.
“It can be 75% and 25%. 75% is towards your long term pension till retirement but you can access the 25% within a short period of time.
“The duty is that it is forcing you to save. It is better to invest in pension schemes than putting it in Ponzi schemes and short term investments. This kind of investment is more reaching and better than investing in Ponzi schemes which are there today, gone tomorrow.
“Today what you are receiving is enough but it wouldn’t be so tomorrow, it is a dynamic thing that all of us need to be engaged in”.
