Nest egg: Old folks pull out new retirement

It is usually a time to reckon with. You spend your whole life working for the government or corporate world. You earn a good salary, educate your children and perhaps buy your own home. But that is as far as it goes.

A time comes when you leave your job. You are alone and remain your own breadwinner. Soon, you do not go past the fifth year after you retire, with your pension unable to cater for all your needs.

But Mr Julius Okara, Ms Wangui Irimu and Mwai Kihu have refused to take this route. They are not ready to wait and sulk in poverty in years to come. The three are members of Fechim Investments Group, an outfit keen to have members live a better life in old age.

Chief executives

However, having worked in big companies, their pensions would be bigger than what some chief executives earn today. And with educated and well off children, their day-to-day expenses could be catered for easily.

But they believe it is what they are doing today that will guarantee them a better future by living on what they invested when they had the energy. Mr Okara, 67, the oldest in the group worked for many years in blue chip companies and rose to head some, like Kenya Airways and Kenya Railways before he took a break in 1997.

Ms Wangui, 51, is still working at a senior position in one of the United Nations organisations in Gigiri. She has a good salary, which she believes must be invested for her to enjoy the future. Mr Kihu, 57, had an eventful stint in the manufacturing industry for many years, opting to get off formal employment while at Firestone 10 years ago.

And when the three join 22 other members for their monthly meetings, what comes out is a well-knit group that has coalesced with a common cause — inculcating a culture of investment in today’s generation. Mr Kihu, one of the founder members, started the group with three others some 18 years ago. “We contributed Sh500 monthly and at first, it was not clear cut what we really wanted to do,” he says.

They were not in a hurry to “invest and eat the fruits” immediately and only admitted three more members in 2005, through a private placement of shares. By this time, one founder had left for other personal commitments. “We were content to remain few since we had a similar vision of a fully-fledged company.

Commitment as opposed to numbers matters more in such groups,” says Mr Kihu, who recommends a limit of three to seven investment group founders. Today, membership has risen to 25, with 13 others invited last year. The investments have risen to several millions of shillings. Mr Kihu declines to disclose the exact value, but one of the members confirmed that each of the new members bought shares worth more than Sh1.2 million. They remit Sh5,000 monthly .

The members are yet to reap any monetary benefits but plans are underway to craft a share transfer facility in the next three years. This means members will be able to dispose a part of their shares. “We shall be able to access the invested resources. We have been patient and this is the way to go,” says Mr Kihu who also doubles as the group’s CEO.

Exit strategy

Such an exit strategy is not yet ripe, he says, as the group is still pooling as much resources as possible to enhance stability. “As more people join and others get older, a time comes when they will want to use their investments. It is the ultimate goal,” he says during an interview at the group’s offices at Uniafric House, Koinange street.

Such a group, financial experts now say, is crucial at a time the economy is on a slow down. The members agree times are hard, and as such, the need to deviate from being a consumer society to one that invests. More experienced in financial management and public service, Mr Okara says he is keen to help younger people save and invest as this is the only way to secure their future.

“Even the government is spending more than it is earning. Like its citizens, it is borrowing to finance its operations. It is tragic for young people,” he asserts. For all those years, membership was drawn from those over over 55 years, and by last year their average age was 56 years. Today, those aged 35 can be admitted.

The resolution to incorporate younger professionals was mooted after a critical analysis of the working class future economic prospects. “We need younger people for perpetuity. An investors group should have as big an age span as possible. There is a risk of outliving themselves if it is made of the same age group,” he says.

Ms Wangui reinforces the import of the youthful faces, “They have fresh ideas on where the economy is headed and are conversant with modern trends in financial management.” Like Mr Okara, Mr Wangui lambasts employees who peg their comfort in old age to pensions.

They say it is not enough to go beyond the most basic things like food and clothing, which is not what life is all about. “Pension is only meant to keep you alive,” Mr Okara says lightly.
It does not therefore make you live well. “In fact, it makes you live worse off than before and this is the trend we want to overturn.”

Ms Wangui, who will be retiring in the next few years, maintains it is prudent to prepare for those times when one is unable to work as they do. “Investments are not just about retirement. They cushion you from deprivation when your productivity is hampered,” says the member of several other women chamas.

Bigger things

Pension, she says, may not enable you to do bigger things dear to your heart. “For example, I may want to go for a trip abroad and relax. I cannot do this using my monthly pension,” she points out as a matter of fact. Speaking to the three, one derives vital lessons on just why a portion of one’s income should be saved and invested.

With harsh economic times eager to consume every single coin that comes in as salary or wages, it has become harder for ordinary earners to save as most of their money is going to consumables. And this situation is being blamed for lack of alternative sources of incomes.

Ms Wangui hints that life could be a lot better for many people nowadays if they had saved during better times, or had other sources of income. “You can never be safe with one source of income. I can bet that the strife we are experiencing now could have been reduced had people put their eggs in different baskets.”

She further cautions against putting money in the bank as a way to save. “Such savings do not bring any meaningful returns. If anything, someone else uses it to invest somewhere,’’ she says. “You will keep going for this money. That is why you find some people broke by the second week of the month,” she observes. She recommends sacco societies and says a fat pay slip that has no investments deducted from it is a tragedy.