Bank Rate, a finance resource center, notes that, even with social security and health insurance; some people may not be able to maintain their pensions. Retirees may sometimes find it hard to cope with daily expenses. The firm, which also deals with retirement planning, asserts that inflation and life expectancy play a major role in a pension holder’s golden years. A packet of maize meal may not cost the same as it did 20 years ago.

On the other hand, the World Bank reports that life expectancy in Kenya stands at a current average of 57 years. According to the law of averages, there will be a number of people whose expectancy will be significantly higher than their less fortunate counterparts. In light of this, a long and healthy life comes with added expenses. As such, it may be necessary for pensioners to save more than they can spend, based on the time they have.

Get a Separate Pension Scheme

Zimele Asset Management Company Limited advises potential retirees to take up additional pension schemes on top of the government-sanctioned National Social Security Fund (NSSF). This enables policy holders to have a sort of safety net in case the government Fund is not enough.

The Asset manager states that there are a number of separate pensions to choose from including Individual Plans, Occupational Plans, Defined Contribution Plans and Defined Benefits Schemes.

Get Life Insurance

There are basically two types of life insurance, namely, Term Life and Whole Life. Term Life Insurance expires after a stipulated amount of time and the policy holder is free to withdraw their accumulated earnings plus interest. For instance, CfC allows a 25% increment after ever third of the term selected by the insurance provider and the policy holder.

Whole Life insurance does not expire because, if the policy holder dies, their beneficiaries get the accumulated funds. However, the holder is allowed to withdraw the money after a specified amount of time.

In case of accidents that may otherwise diminish the pension fund, some life insurance providers offer medical and disability covers. Jubilee Insurance promises a disability cover for up to KES 500,000 for policy holders under the Fanaka Plan. As the country’s leading pension provider, the firm projects a customer base growth of 80% per annum.

Pan Africa’s Flexi Shield cover gives a replacement of income for KES 15,000 per week during times of incapacitation. It also has an accidental medical cover of up to KES 175,000 per accident and can include spouse at a 5% discount. 10% of the cash is returned if the policy holder goes 3 years with no claims. The insurer’s Flexi Life package returns the full amount assured after the policy holder retires.

Be Patient

Pension plans continue to mature the longer they remain untouched. If the policy holder withdraws the money early, they will miss out on an opportunity to make more profit. Forbes Magazine advises pensioners who want bigger returns to save more and work longer. The sooner a person retirees, the less money they can get from their pension.

Have a Balanced Portfolio

Pension providers like Jubilee, CfC Life, Madison Insurance,Pan Africa Life Assurance, ICEA Lion, UAP and Zimele and Amana Capital give their clients a variety of investment plans to choose from. Pension holders can opt for cash, money markets, fixed income, equity securities or offshore investments.

The RBA reports that there are over 1200 registered pension plans, 23 of which offer individual schemes. Each company has their own benchmark for the amount of money the client will receive upon retirement. Amana Capital, for instance, offers a minimum of 12.5% return on offshore investments. For money markets investments, the firm offers an average amount based on interest rates from Treasury Bills.

The same applies to Fixed Income investments and cash deposits from the pension holder. Returns for money invested in Equity Securities, however, are based on the Nairobi All Share Index. This refers to a weighted average of all the shares listed on the Nairobi Securities Exchange (NSE).

Pay Fewer Taxes

For individual pension schemes, pension funds give tax-free monthly benefits to the policy holder with a specified cap on the amount paid. Zimele Asset Management, for instance, gives the holder tax-free monthly benefits of up to KES 25,000. The Asset manager also promises tax-exemption for lump sum returns that do not exceed KES 600,000.Anything above the specified amount is subject to taxes, depending on how much money is released to the pensioner. However, pensioners above the age of 65 do not pay taxes for any amount with Zimele’s personal pension plan.

CfC Insurance has a tax deductible monthly pension income of up to KES 17,500. For contributions to the scheme, the Retirement Benefits Authority (RBA) allows tax-free deposits of up to KES 20,000. Those depositing more will be taxed but are likely to get more returns, according to a report by Amana Capital. The firm also promises tax deductions of up to KES 6000 with their My Pension package.

Avoid Unnecessary Expenses

Fulcrum Inquiry, a damages, appraisal, accounting and economics firm, notes that some retirees tend to take up hobbies that may dig into their pension funds. As harmless as it may seem, pass times need to be monitored from a financial perspective, notes the consulting firm. Some hobbies like golf or travelling can cost the pension holder a lot of money. Fulcrum advises pensioners to weigh the cost of a hobby, making sure that it does not exhaust their funds.