At least two in five pensioners use the money they receive after retirement to pay children's school fees, and 88 per cent of retired people are still dependent on their children, grandchildren and extended family members.
Of those who still depend on pensioners for their livelihoods, nearly half are aged 21 and above, while a quarter are over 25, according to a new survey that sheds light on the harsh realities older Kenyans face after retiring from the workforce.
The survey by the Retirement Benefits Authority (RBA) has revealed the burden senior citizens continue to carry in their sunset years, a time when they would be expected to rest after decades of toil, as the country's dire unemployment rate leaves energetic youths and their children, in some cases, relying on meagre pensions from their parents to survive.
"It is interesting to note that the highest number of dependants, 377, were over the age of 25. This may be indicative of the state of labour shortages in the country, further accelerated by the disruption to employment caused by the Covid-19 pandemic, where children of pensioners have resorted to depending on their parents and, in some cases, grandchildren," the RBA report said.
Most of the dependants are the retirees' own children and grandchildren, and in some cases, they are caring for both their children and grandchildren, the survey shows.
As a result, older people, the majority of whom are over 60, are spending a large proportion of the pensions they receive after retirement on bills unrelated to direct financial growth, with paying school fees topping the list, followed by buying a house to live in and also buying land.
This could indicate that most Kenyans who have spent most of their lives working still don't own a home when they retire.
"The biggest challenge that participants complained about was the obligations of extended family members in terms of paying school fees and also taking care of grandchildren. In retirement, families of retirees should be advised not to seek a higher standard of living, such as sending children to private schools, if paying school fees over a long period is not sustainable," the RBA report said.
The proportion of retirees using their money to pay off loans, medical bills and other purposes is 20 per cent. The majority of pensioners are not satisfied with this reality, feeling that their pension income is not sufficient to meet their needs.
According to the report, 73 per cent of respondents said their retirement savings were not adequate. A slightly higher proportion of male pensioners felt that their pension income was not adequate compared to their female counterparts.
Moreover, most pensioners with dependants are more dissatisfied with their pension than those without dependants, who make up only 12 per cent of all pensioners.
"The gender distribution of men and women who felt their benefits were inadequate was almost equal at 74 per cent and 71 per cent respectively. Seventy-four per cent of those with dependants felt their benefits were inadequate, compared with 69 per cent of those without dependants," the report says.
This is despite the fact that less than half of pensioners are able to invest their benefits in gainful employment, an indication that many are living from paycheck to paycheck.
Shares, bonds 'unpopular'
Investing in shares and bonds issued in the capital markets was the least popular use of retirees' lump sums, with only 4 per cent of respondents doing so, an indication of the budget constraints facing retirees.
The findings in the RBA report further show that pension schemes report the highest average lump sum payouts for Kenyan pensioners, while the National Social Security Fund (NSSF) reports the lowest. The majority of pensioners receive their lump sum payments through direct transfer via Electronic Funds Transfer or Real Time Gross Settlement (RTGS).
"In terms of the amount of lump sum paid at retirement, NSSF had the lowest average amount of Sh172,844, followed by savings and cooperative societies whose average lump sum payment was Sh512,943 and pension schemes at Sh1,956,727.”
“About 80 per cent of pensioners received the lump sum through direct transfer while 16 per cent received it through cheques, three per cent through cash and one per cent through M-Pesa," the report said.
The average pension received per month is Sh31,478, with a minimum of Sh2,100 and a maximum of Sh400,000.
And, while the majority of pensioners have lived with stagnant salaries and have been unable to secure an annual increase in pension payments, almost half of those who do receive increases don't understand how the increases are determined.
"Sixty-five per cent of respondents have not received an annual pension increase. Of the 35 per cent who did receive an annual increase, 43.4 per cent did not know how their increases were determined, 24.1 per cent responded that their increase was determined by annuity and 19.3 per cent by inflation," the report said.
Farming and running a business are the most common economic activities Kenyans engage in after retirement. The RBA survey shows that 41 per cent of pensioners are engaged in farming only, while 23.3 per cent are engaged in running a business only.
The RBA study surveyed 424 pensioners out of a sample of 602 across 42 counties.
Seventy-two per cent of respondents were male, with more than two-thirds aged between 60 and 69. A quarter of pensioners were aged between 50 and 59, while 2 per cent were over 70. The survey was carried out between December 2021 and February 2022.