By Charles Were.
Members of savings and credit cooperative organisation (Saccos), just like workers in Micro-Small and Medium-Sized Enterprises (MSMSE)- the Jua Kali artisan and the youth are now set to benefit from Mobikeza, a digital Pension product by Octagon.
According to Octagon Pension Chief Executive Godwin Simba the product is beneficial to saccos without any proper pension plan.
He says Sacco members can either sign up separately using the USSD code or mobile app, then contributions remitted by a single payment either through paybill or bank transfer or cheque a nd a schedule of contributions remitted via online portal.
Sacco members will enjoy the convenience that comes with Mpesa since the solution is integrated with MPESA and the Bank’s platforms for payments and withdrawal of the amounts saved including interest.
Mobikeza the CEO says has unmatched capability of convenience in on-boarding, tracking and access of funds all through mobile platforms with access to three types of investment funds namely; Ustawi Fund, Hakika Fund and Usawa Fund.
We believe that Mobikeza will be able to address the needs of the informal sector that require a flexible and affordable product that will be able to show daily, monthly and yearly yields, in turn, boost the saving culture and guarantee a comfortable life after retirement,” Simba said.
“Octagon is committed to growing the Pension Sector coverage by simplifying access and understanding of the pension industry through innovative technology platforms and educating the informal sector on the benefits of saving for retirement, the yields of such investments and how to track your funds,” Simba added
Octagon has invested Sh10 million in the development of the solution.So far, Mr Simba says 5000 people have been enrolled and they expect the number to grow to one million in the next 12 months.
The informal sector is said to constitute 35-50 per cent of the economy. Mobikeza is anchored under the Octagon Personal Pension Scheme which is regulated by the Retirement Benefits Authority.
The Retirement Benefits Authority (RBA) Chief Executive Officer Nzomo Mutuku termed the launch of the product as timely with a key focus of increasing penetration of pension plans.
According to RBA CEO, there are no enough products in the insurance and pension industries to support pension uptake, especially the Post Retirement Medical Fund.
The Regulator lauded the need for innovation to accommodate the informal sector unlike the current pension plans that are mostly designed to cater to the formal sector in terms of access and contributions amount.
PMRF is a new medical fund targeting retirees for provision of healthcare upon retirement.
“We need such products to bring on-board millions of Kenyans outside the pension bracket and complexity surrounding pension schemes,” Mutuku said.
Mutuku said the products need to be incorporated with other financial services including insurance and credit facilities.
“People in the informal sector face high shocks including medical, business and funeral shocks that may destabilize the savings for retirement plan,” he said.
According to Simba, Mobikeza will automatically enroll members for group life cover of Sh250,000 over their savings and funeral benefit of Sh25,000.
“We are also working to interface a credit bundle. However, we will have the risk of default born by the lender,” he said. The firm is targeting to sign a non-disclosure engagement with existing mobile money lender in the market.
This development will allow self-employed youths in the informal sector to secure their retirement days through the mobile-based saving plan.