Life starts at 40 but at 50, it gets even better because this is the time to spend your time, your way without anyone bossing you around.
However, this is not the reality in our world today especially for the majority of retirees who find themselves stuck and without a routine, they do not know how to manoeuvre and navigate life.
Health issues become a daily occurrence, mostly, and with the demands and inaccessible healthcare services, retirement becomes hellish.
Medical cover costs are a big burden to families and with retirees having to depend on their children in case they do not have health insurance, it becomes even worse leading to strained relationships.
But this is meant to change for many with the launch of the Suluhu Umbrella Scheme which is retirement and a medical plan by non-banking financial services consultancy Liaison Group.
The product is the first one in the Kenyan market allowing members to port their medical coverage through their pension and income drawdown in one platform.
Liaison Group Managing Director Tom Mulwa says “Under the Suluhu Umbrella Scheme, employers and by extension employees are able to house, under one platform, a comprehensive offering that incorporates retirement needs, medical insurance and income drawdown.”
Under the scheme, a member can contribute both for, and on attaining the retirement age, the funds for retirement will be utilized to secure a retirement benefit while the medical fund caters for their medical cover fully on retirement. The scheme aims to allow members to port their benefits from any plan they have into their retirement on the same terms as they had before.
Registered under the Retirement Benefits Authority (RBA) and Kenya Revenue Authority (KRA), the Suluhu Umbrella Scheme offers a number of benefits to organizations and individuals: tax-exempt contributions, attractive returns, accessibility (through SMS and online), simplified management, cost efficiency and availability to various employers.
Mulwa adds: “Suluhu Umbrella Scheme ensures that one is not just guaranteed a stable income in retirement, but also has a reliable medical cover. We have designed the scheme with inbuilt flexibility where we have put in place a highly competent panel of service providers to ensure a high quality of service. The fact that the service providers are not related is also critical for good governance.”
Service providers on the Suluhu Umbrella Scheme are Liaison Financial Services as Scheme Administrator and Founder, Kenya Commercial Bank (KCB) as Corporate Trustee, NIC Bank as Custodian and Stanlib Kenya as Investment Manager.
Studies indicate that 60 per cent of an individual’s medical costs are incurred in retirement age.
Unfortunately, due to their high risk, older people have had to pay high premiums to get medical insurance with some insurance providers not offering medical coverage to people aged above 60.
A trend analysis report shows that health expenditure had grown to Sh73.2 billion by 2016 while the percentage of admissions for people over 65 years stood at 34 per cent in 2013 compared to 25 per cent a decade ago.
The Retirement Benefits Authority (RBA) CEO, Nzomo Mutuku says that the Suluhu Umbrella Scheme demonstrates welcome innovations in the local pensions industry.
The Liaison Group was founded in 1981 and provides a diversified suite of financial and risk management solutions under Risk and Insurance, Healthcare, Pension and Investment Consulting.
Managing assets in excess of US$ 2 billion, Liaison Group has a footprint in at least eight countries including Kenya, Uganda, Tanzania, Rwanda, South Sudan, South Africa, China and the United Kingdom.
The Suluhu Umbrella Scheme is built on the Post-Retirement Medical Fund (PRMF) set up within a registered retirement benefits scheme.
The RBA Act was amended in 2016 to specifically provide for the establishment of the PRMF. Thereafter, RBA commenced a consultative process to develop guidelines to govern the PRMF.
Specifically, the guidelines intend to regulate and supervise the establishment and management of Post-Retirement Medical Funds, provide a guidance for schemes and Post-Retirement Medical Funds to allow members and/or sponsors to make additional voluntary contributions in respect to funding a medical fund and provide for members to transfer a portion of their retirement benefits to a medical cover provider at retirement.
The draft guidelines went through an elaborate stakeholder consultation process and were exposed to a discussion by members of the public nationwide.
Subsequently, the guidelines were approved by the Attorney General and the National Treasury and are now awaiting final gazettement.
PRMF works the same way a pension scheme provides assurance of an income upon retirement by ensuring the provision of health care upon retirement.
In this year’s Budget, National Treasury Cabinet Secretary announced that PRMFs would be exempt from the retirement benefits levy in order to boost members’ contributions.