Despite Kenya being a youthful nation—which would have a lower disability rate than ageing populations—disability is on the rise due to factors such as road traffic crashes and lifestyle diseases.
When Mwai Kibaki’s government in 2009 pushed the civil service retirement age to 60 from 55, many (yours truly included) thoroughly opposed the idea. Twenty thousand civil servants who were approaching retirement were given an extra five years.
Those slots should have gone to the thousands of jobless youths – or so I thought.
The author of the circular that extended the retirement age was Ambassador Francis Muthaura, the then head of civil service and secretary to the Cabinet. He was already past 60 years himself.
However, a deeper understanding of how economics and the management of public finances work indicates the policy shift had merit. The economic logic is simple.
Life expectancy had gone up. With more Kenyans living beyond 70 years, a lower retirement age of 55 would place an extra pension load on government coffers. In a nutshell, the Kenyan government could no longer afford pension servicing as life expectancy increased.
The additional five years were basically a government strategy to delay the pension load payable to its elderly retirees.
This issue brings to the fore the importance of pension management as a crucial element in cushioning the elderly in their retirement and old age.
Public and private entities struggle with pension payments and management. Counties, for example, have massive debts owing to pension funds entities like NSSF, County Pension Fund, and Lapfund. Unremitted pension contributions plus interest from counties is now estimated to be Sh90 billion.
That is almost 30 per cent of the combined equitable share that counties receive from the National Government each year. That means, therefore, to be able to defray these amounts, counties ought to ring-fence a third of their budgets for pension payments. This is quite fiscally impossible. But debts have to be settled as a legal duty and, most importantly, as a moral duty towards the elderly.
To remedy this problem, pension funds have proposed negotiating repayment plans with individual counties.
Many struggle to adhere to the terms of the settlements. The best way to address this recurring issue would be negotiating asset swap deals. Most counties are cash-poor but asset-rich.
Pension funds are usually cash-rich with an eye for stable assets like buildings and land. Their clients (retirees) most importantly wish to own a home.
An exchange programme would therefore create a win-win situation – pension funds obtain county land in exchange for pension debts. Probably the current national government housing projects should have pension funds as anchor institutions.
And the retired elderly would have a place to call home and help alleviate old-age poverty.
Housing that is designed to meet the needs of the elderly is important. That includes proper lifts, alarms that notify service providers of urgent care, and proper road designs. Pension funds should take advantage of their special knowledge of this cohort of citizenry to build housing that meets their concerns.
But pension fund management should also be improved. Automation is important. As per World Bank advice, cloud services to store data, robo-advisors to offer personalised investment advice, and blockchain technology to ensure security and transparency of transactions are recommended.
Apart from proper pension planning, healthcare improvement is a crucial intervention that helps the elderly. As people age, healthcare demands skyrocket. Whereas pension funds payable to the elderly can be offset against healthcare insurance payments, that only helps retirees from the formal sector.
The majority of Kenyans are in the informal sector, and once they retire, they depend on family members to cater for them in their old age.
But there are several instances where family members have insufficient resources to cater for the elderly. Both counties and the national government have a moral duty to establish schemes that support the poor and vulnerable elderly to pay health insurance covers.
Preference should be given to widows and widowers with few benefactors.
An open recruitment for the beneficiaries should be adopted, and decentralisation embraced to reach a wider variety of beneficiaries.
Finally, sectors that employ the elderly should be promoted to boost labour participation by that cohort of citizenry. Agriculture remains an important employer for the elderly even past their retirement age.
This labour participation by the elderly through agriculture should be promoted as it prolongs their life expectancy.
Making agriculture productive, for example, by way of providing certified maize seeds, is important as a strategy to keep the elderly productive.
In conclusion, apart from moral reasons for supporting the elderly through pensions, healthcare, and agriculture, it is smart politics to do so.
In the UK, the 18-24 year olds’ 2019 election participation rate was 55 per cent, whereas for those aged 65 and above, it was 79 per cent.
In the US 2020 General Election, the 18-24 year olds’ election participation rate was 51 per cent, while for those aged 65 and above, it was 76 per cent.
This is true in all democracies – the elderly have a higher voting participation rate. And as more societies become more elderly, issues that concern them matter more.
However, this should not imply youth matters should be ignored. Gen Z’s revolt last year proved youths cannot be ignored.
Youths have the energy to move things. But it is the moral thing to help the ageing vulnerable.
Dr Kang’ata is Murang’a County governor. email [email protected]
