New Umbrella Scheme Offers a Ray of Hope to Retirees

Tom Mulwa, CEO, Liason Group

Liaison Group’s Suluhu umbrella scheme bundles pension with health insurance – a
first in the Kenyan market

By George Gichuki

The need of securing one’s future cannot be overemphasized. Nevertheless, whereas
individuals contribute for a secure future by joining pension schemes while they are in active
employment, most of that income has been eroded by the high medical expenses usually incurred in their sunset years. Indeed, studies indicate that sixty per cent of an individual’s medical costs are incurred in retirement age with thirty four per cent of the people aged over sixty five years being admitted in 2013, compared to twenty five per cent a decade earlier.

Unfortunately, due to the perceived high risk of providing medical covers to the senior citizens, some underwriters shy away from providing this critical service to those who are aged above sixty five years. To compound this predicament, most employees loss their medical benefits as soon as they retire or their employment contracts end. It is against this background that the Retirement Benefits Act was amended in 2016 in order to give room for
the establishment of the post-retirement medical fund (PRMF).

The fund is set up within a registered retirement benefits scheme ( or by an employer) to which contributions are made while a member is in active employment . Medical cover benefits are met from the same after a member has retired or his employment contract has ended. “Under this scheme, a member can contribute both for retirement and a medical plan and on attaining the retirement age , the funds for retirement will be converted to a monthly pension , while the medical fund caters for his or her healthcare needs ,” says Mr. Nzomo Mutuku, the chief executive officer of the Retirement Benefits Authority ( RBA), adding that the innovative scheme allows members to port their benefits from any plan they have into their retirement on the same terms as they had while on active employment.

Furthermore, according to Mr. Mutuku, it has been observed that one of the major causes of early deaths after retirement is lack of appropriate medical care for the senior citizens. Consequently, in order for an individual to receive adequate and comprehensive medical care after retirement, some form of long term financial planning is required to provide for post-retirement medical needs. “The post retirement medical fund ensures provision of health care upon retirement, the same way the pension scheme provides an income,” emphasizes Mr. Mutuku.

Taking the aforesaid into consideration, Liaison Group recently launched an umbrella scheme dubbed Suluhu (Kiswahili word for solution). It is the first product in the Kenyan market to allow members to port their medical cover through their pension and income draw down in one platform. While speaking during the launch, Mr. Tom Mulwa, the managing director of Liaison Group observed : “ We have designed the scheme with inbuilt flexibility to allow members to port their current plans into retirement at the same time,” adding that Liaison Group has put into place a highly competent panel of service providers in order to make the innovative product efficient and effective. The service providers include: Liaison Financial Services as the scheme administrator and founder, KCB as the corporate trustee, NIC Bank as custodian and Stanlib Kenya as the investment manager.

Diversified suite

Now in its thirty seventh year of business, Liaison Group is an integrated non-banking financial organization. It offers a diversified suite of financial and risk management solutions domiciled under four businesses: risk and insurance, healthcare as well as pension and investment consulting. Managing an asset base in excess of USD2 billion, the Group has global service points in at least eight countries and financial centres including Kenya, Uganda, Tanzania, Rwanda, South Sudan, South Africa, China and United Kingdom. “This is a deliberate business model which helps us to add value across the financial service sector,” says Mr. Mulwa. “We aspire to be a true African financial organization by the year 2020 and
our service is largely driven by technology and delivery of exemplary customer experience,” he adds.

Benefits of Suluhu
Registered by the Retirement Benefits Authority and the Kenya Revenue Authority, the benefits of the Suluhu umbrella scheme include: tax exemption on contributions, attractive returns, simplified management and associated cost efficiency.

“The opportunity of Suluhu’s growth is massive and its need appetite is quite high,” says Mr. Mulwa while emphasizing that Liaison Group is the first player to launch such a product in the Kenyan market. He further points out that even upon retirement, under Suluhu, one will still continue to enjoy the same medical benefits just like when he or she was in active employment including the team of doctors and network of hospitals.

To start with , Liaison Group will tap into its existing pool of pension schemes in order to enhance the growth of Suluhu before aggressively marketing the product to various potential customers through initiatives such as road shows and media campaigns. Besides corporates, the product is also open to small and medium enterprises (SMEs) as well as micro, small and medium enterprises (MSMEs). The latter is popularly known as the Jua Kali sector due to its informal business model, but it is a major creator of thousands of jobs throughout the country and it cuts across fields such as: farming, workshops and retail shops throughout the country.

“ This market segment remains largely untapped despite its immense potential and most of the owner managers and employees operating in it neither have pension schemes nor medical covers,” says Mr. Mulwa adding that it therefore becomes a herculean task for them to meet their medical expenses and day to day needs when they cease being economically productive. Very effective in mobilizing long term savings which contribute immensely to our country’s socio-economic development ( for instance funding of infrastructure development), the pension industry is worth more than Kshs. 1 trillion. Nineteen per cent of this amount is under the National Social Security Fund (NSSF), while the remaining eighty one per cent is under private pension players. In terms of development, Kenya’s pension industry is rated second to South Africa’s in the entire African continent.

Strategic plan
As per its 2016-2020 strategic plan, the Liaison Group is planning to cover most of the countries in Africa by leveraging mainly on technology. “We are also planning to list at the Nairobi Securities Exchange (NSE) by 2030,” says Mr. Mulwa. “ So far, we have covered the East African region, established a presence in Johannesburg ( South Africa) and Cote d’Ivoire as well as a network partner in Morocco and we shall soon set up shop in Kinshasa – the
Democratic Republic of Congo ( DRC) – in line with the realization of our vision to conquer the African continent,” he adds.

Mr. Mulwa is very optimistic that the future of Liaison Group is very bright considering that they are serving a huge market (Africa) with a population of over two billion ( with sixty per cent being youth) and a wealth of natural resources – especially minerals. “We understand the terrain of the African market since it is our home and we are therefore well positioned in serving it effectively and efficiently,” he emphasizes.

Attracting and growing talent

Needless to say, attracting and retaining the right talent goes a long way in enhancing the growth of organizations. In that regard, Liaison Group has established an academy through which it recruits fresh graduates and offers them a three year in-housetraining programme. Those who graduatefrom the academy become financial consultants and they are deployed to perform key functions in the organization. The academy is supported by Swiss Reinsurance Company (commonly known as Swiss Re) – the world’s second largest reinsurer. “This is one of our ways of giving back to the society by contributing to the development of young graduates’ skills,” affirms Mr. Mulwa.

To sustain the momentum in the growth of Liaison Group, Mr. Mulwa observes that they will leverage on technology. “ We have put in place very powerful in house information technology ( IT) systems to support our ambitious growth plans,” he says adding that they will also take advantage of the IT solutions offered by giant technology firms with a presence in the country. By and large, the company shall also strengthen its sales force by arming it with the latest skills and knowledge so that
it can secure more business.



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