Some of the new laws/policies that are coming up are just going to kill rather than promote a saving culture among workers in Kenya. I have just been informed that it is no longer possible to make a partial withdrawal from my individual pension scheme with CFC until I retire or I am out of employment. Last year these fellas paid me an interest rate of about 4% for my savings.

In the past what I have done is save money with the pension scheme for something like 2 years, and then make a partial withdrawal and put the money in higher yielding investments e.g. plots. But with the new policy this is no longer possible.

Even if pension contributions are exempt from PAYE tax, I don’t think it is worthwhile for me to wait for 20 years to get back my savings. Why do these fellas think that I can lend them my money at 4% interest rate per year for 20 years and then go and borrow the same money at 20% from banks? I have just instructed my employer to immediately terminate my contributions.
What do Wazuan’s think about this?

@ kimiri, most of pension schemes did poorly last year because of the nature of their investiments. Even my beloved aon~jubilee did about the same only it was compesated by previous performance of > 20 %. I would advise you to transfer your pension to jubilee as they do better.

...where do u think they,l get their profits if they dont give you low returns even the daftest fund manager can easily do 8% plus in an economy like ours...

The pension business is more about protecting the initial investment and sitting pretty on workers' money.
Most of them do not actively trade in the NSE. They buy companies that pay dividends and live off that. The rest is in bonds and some real estate developments.
If you want high yields in the short run, then pension schemes are NOT the way to go.
Trade in the NSE or speculate on plots or other businesses. Pension is a whole different philosophy.

You are absolutely right. 4% is peanuts and negative interest in real terms. GoV is misusing its authority to 'fool' everyday Kenyans into pension schemes -- some of them dubious. I tried reading through the NSSF fliers that were on the round some time back. To me, it looked like a pure scheme to fleece the uninformed.

Only put the minimum recommended by GoV. 10% isn't that great as well. in the current environment, 20% + is very possible.

Ok, you raise a good point. But given the nature of monetary policy in East Africa, a pension should at least aim to beat inflation. That sets a floor for future cashflow discount rates. What was the last official inflation figure?

My thinking....do your pension but be very aggressive when it comes to plots,business & NSE. At least that way you balance the two.

Normally. its the individuals schemes that declare their returns to the members and issue a statement. Nit sure if the info is available elsewhere.

For Jubilee, the performance has been 12%, 8.3% and 9% for 2014, 2015 and 2016 respectively. The performance has been on a downward spiral and may be indicative of other schemes too.