February 2021 BusinessDaily; A healthcare insurance cover is to be included in the self-funded pension scheme for civil servants, enhancing comfort for retired officers.
Director of Pensions Michael Kagika said the Treasury was working with the department of public service to develop a post-retirement health cover for the 663,000 government workers.
“We are at the initial stages of looking at a post-retirement health insurance arrangement since we know that at old age our senior citizens are affected by diseases when they are not in active employment and have difficulty accessing health services,” Mr Kagika said.
The new Public Service Superannuation Scheme is expected to collect Sh36 billion in annual contributions by 333,460 civil servants below the age of 45 in the first year alone.
The new scheme has been lined with benefits, including tax incentives, while allowing members to access the funds even if they quit government before attaining the retirement age.
It will also have a vesting period of five years, allowing workers to access half of their savings, and is being eyed by the Housing ministry to boost mortgages and deliver the government’s promise to deliver affordable homes.
The medical savings component will help retiring workers avoid the problems of having to meet high costs of healthcare when they retire.
Most Kenyans who enjoy medical cover during their working life go into retirement without any back-up after they part ways with their employers.
Buying a medical cover at an advanced age is usually expensive to the individual considering the insurers will factor in pre-existing conditions, impose a lot of restrictions and charge high premiums.
This leaves the elderly relying on family and friends’ contributions when they get sick.
Zamara Group Chief Executive Sundeep Raichura said 60 per cent of medical spend happens when one has retired, putting pressure on the little savings and social networks.
He said the government’s move sends a strong signal to the market to encourage the private sector to offer similar packages for its workers.
“The reality is that most retirees struggle with getting proper medical cover. Most schemes are voluntary and people do not want to pay an extra cost for post-retirement health cover. The public service post-retirement savings for health will be a very big step and will send a strong signal to the market,” Mr Raichura said.
Very few Kenyans save for retirement and are forced to look for work even after attaining the age of retirement to meet basic needs.