Britam Taps Into Retirement Income To Grow Its Pensions Business

By Robert Kibet

Diversified financial services group, British- American Investments Company (Kenya) Limited (Britam) has launched a product that will allow retirees to re-invest their retirement benefits for higher and more secure returns. The Platinum Drawdown Plan, which is a first for the Kenyan insurance industry, is a flexible plan that will allow retirees to re-invest their retirement money and take out a portion of the fund as an income. 

The product is available to individuals aged 50 years and above with retirement benefits savings under a registered scheme with the Retirement Benefits Authority. Under the new plan, the pension benefits will be invested with a capital guarantee against investment loss for a minimum period of 10 years. The plan is suited for retirees, who are keen on further re-investing and growing their benefits and need flexibility in frequency of receiving the income that is suited to their income needs.  It is also an option to members of provident funds and retirees who chose not to take part or all their benefits as a lump sum.

The scheme is registered by the Retirement Benefits Authority, following an amendment of the Retirements Benefits 1997 to allow Income Drawdown as an alternative to annuity. Speaking during an event to unveil the product, Britam's Group Managing Director, Dr Benson Wairegi, said that the new product was borne out of research focused on developing products that are suited to the growing needs of the market.

"The unveiling of this plan is in line with Britam's quest for continuous improvement and innovation.  There has been increased demand from the market on how retirees can make their pension income work for them after retirement, hence the diversification," Dr Wairegi said. He noted that there was growing demand for retirement income alternatives from annuities from high net worth individuals with huge retirement savings and who have a high appetite for investment risk.

The Platinum Draw Down plan also targets retirees who intend to purchase an annuity at a later date, have other sources of income, and do not need guaranteed income from their retirement savings. It also suits those who wish to leave an inheritance to their beneficiaries. In the unfortunate event of death, the benefit can be passed on to beneficiaries as per the deceased's wishes as long as the member has not exhausted his funds. The Beneficiaries also have the option of converting the funds to annuity at a later date when the fund is bigger hence more income.

In addition to this, if the deceased was above 65 years, beneficiaries get favourable tax treatment since the benefits are not taxed. Once fully implemented, the NSSF Act 2013 will increase the number of people saving for retirement and grow contributions to the retirement benefits schemes. The conversion of NSSF from a provident fund to a pension scheme will also increase demand for retirement products that are more flexible and guarantee good returns.

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