CfC Launches Boresha Maisha Retirement Plan Targeting SMEs

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Life insurer CfC Life has launched an innovative retirement savings plan that allows small and medium enterprise (SME) clients to choose how the funds are to be invested. Known as Boresha Maisha Umbrella Retirement Plan and targeted at SMEs and non-governmental organizations (NGOs), it gives clients a direct say in how the saved funds are to be invested. It is the first such scheme run by an insurance company in Kenya.

Under the plan, the employer is required to make up a certain monthly contribution, at a minimum of six per cent of the salary, which is matched by the employee’s contribution. The employer then makes a decision on how the funds will be invested: either in a Guaranteed Returns Fund or a Utilized Fund. Funds invested in the former are assured of a return regardless of the prevailing circumstances, while for the latter; returns vary, based on obtaining factors in the market. For the Utilized Fund, clients can choose to spread their risks from a portfolio that includes a Money Market Fund, an Equity Fund and a Balanced Fund.

“Boresha Maisha Umbrella Retirement Plan is our answer to the need for a bankable retirement savings solution for our SME and NGO sectors. With the plan, we present these clients with a simple and affordable means to secure the future of their workforce, while maximizing the return on their contributions and that of their employees,” said Managing Director Abel Munda at the launch at the Sarova Stanley Hotel.

Besides choice of portfolio, the Boresha Maisha Umbrella Retirement Plan also offers CfC Life customers a number of advantages: simple sign-up and a sound governance structure that segregates key duties with CfC Life designated as the plan’s sponsor, KCB Bank as trustee and Actserve as investment advisors.

“Taking up retirement benefits plans and solutions reassures employees of a secure future in their retirement days, and thus ensures that SMEs get and retain the best available people in the job market,” said Ms June Gathoni of the SME Resource Centre, who presided at the event.

The launch comes a time when post-work financial security has become a major policy issue in the country. Still, most SMEs, whose sector contributes 85 per cent of all the salaried jobs in the Kenyan economy and 20 per cent of the GDP (Gross Domestic Product), do not have retirement benefit schemes for their employees.

The retirement benefits industry has also been growing, however.  According to RBA, industry assets grew by 9.9 per cent in the second half of the year 2013 to stand at Kshs.696.68 billion as of December 31st 2013. Compared to last year, December 2012, the assets under management have grown by 27 per cent from Kshs.548.7 billion to Kshs.696.68 billion.