By Jackson Okoth
A growing number of Savings and Credit Co-operative Societies (Saccos) are facing a dilemma. Most are at a loss over how to retain an ageing membership that is fast withdrawing from the society, upon retirement from formal employment.
Majority Saccos have no specific financial products or services for their retired members, owing to the legal minefields around pension funds and the still rules by the Retirement Benefits Authority (RBA).
Pension-backed financial products are still considered quite complex even for the more sophisticated financial institutions, including stockbrokerage firms and commercial banks.
But with competition for new members getting stiff, more Saccos are aggressive and deliberate in retaining their senior members.
A case in point is Mudete Tea Sacco, which has a huge number of tea farmers who have retired from either the teaching profession or as civil servants.
“We have members who have retired from formal employment. We are yet to launch a specific product that appeals to these senior citizens. But we have been encouraging such members to channel their pension earnings through their FOSA accounts,” said Antony Bitinyu, CEO Mudete Tea SACCO.
He disclosed further that Mudete Sacco will in the coming months roll out a product designed to appeal to older members, especially those earning monthly pension.
Other Saccos have chosen to be more deliberate.
In the case of Nafaka Sacco, there is a specific financial product that is tailored to meet the needs of retired members.
This society has members, who are over 40 years old, making up 70 per cent of its membership.
Some members have already begun preparing for retirement from NCPB and from the HR records. An estimated 29 members retired at the end of December 2019.
Nafaka Sacco is taking advantage of an invitation by the NCPB provident fund management to attend their training sessions and educate members on how they can continue to benefit as members after retirement.
Some 8 members, who retired from NCPB have already invested their provident funds to the tune of more than KSh 18 million, said Kipkoech Mwarey, Board Chairman, Nafaka Sacco. He made this disclosure during the Society’s 26th Annual General Meeting.
The Society is on a program, using delegates to reach out to members who have retired from NCPB.
“We need to retain retiring employees from NCPB to sustain membership and ourcapital base,” said Mwarey.
Saccos have been slow to develop any financial products for retirees, who earn pension. This is due to the current legal requirements that prohibit any financial institution from lending against pension earnings.
Due to stiff competition in the Sacco industry, a number of societies are reluctant to discuss features of any of their products for retirees.
All pension providers and administrators are required to adhere to rules and regulations set out by the Retirement Benefits Authority (RBA). A number of Saccos are unable to meet these RBA rules.
“Apart from allowing senior members to process their pension benefits through FOSA, we also offer financial advice on how to manage retirements as well as a number of financial solutions that enables our senior members to enjoy their retirement,” said Eunice Kaboi, CEO Mafanikio Sacco.
Mwalimu National, which has the largest balance sheet in the Sacco sub-sector, has been even more deliberate in its campaign to rope in retirees.
This Sacco has already notified its senior members, due to retire, that they do not need to pull out from the Society. The Society provides a platform through which this category of members can authorize for their pension to be processed through FOSA.
Perhaps a case instituted by retired prison officers against Magereza Sacco, claiming ownership of Mageso Chambers and Mageso Court, is an eye opener to those Saccos that appear not to value senior members.
The property in dispute here is worth billions with both the Sacco and retired members laying claim.
Mageso Court, situated in Westlands, comprises 14 residential units and 8 servant quarters with an annual total rent collection of Sh 9,365,000.
Mageso Chambers, situated along Moi Avenue, houses the Society’s Head Offices from 3rd to 6th floor. The rest of the floors, mezzanine, 1st and 2nd are rented out.
