British-American Investments Company is eyeing billions of money from retirees who still don’t want to take their money with them home.
The asset management and insurance company yesterday launched a new product that will allow retirees to re-invest and take away some portion of the fund as income.
Last year, the firm says, Sh5 billion worth of retirement money came in the market. The product to be marketed as Platinum Drawdown Plan is available to individuals aged 50 and above. But they should be having retirement benefit savings in a registered scheme with the Retirement Benefits Authority.
“There has been an increased demand from the market on how retirees can make their pension income work for them after retirement, hence the diversification,” Britam’s Managing Director Benson Wairegi said.
The firm says pension benefits under this plan will be invested with a capital guarantee against investment losses for a minimum of 10 years. The new product comes at a time when there has been increasing pressure on the industry to innovate and grow penetration. Insurance penetration in Kenya has remained low, at less than 3 per cent in most product lines. The Insurance Regulatory Authority says that insurance penetration contracted from 3.4 per cent last year to 2.8 per cent this year.
This virgin market is increasingly attracting new players among them banks.
Britam is also looking at bancassurance, where banks are now selling insurance products in banking halls, as a new revenue drive. Its new product is also targeting retirees who want to purchase an annuity at a later date, have other sources of income and do not need a guaranteed income from their retirement savings.
“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. It also suits those who wish to leave an inheritance to their beneficiaries,” the firm said. If one dies, the money is passed over to beneficiaries. “If the deceased was above 65 years, beneficiaries get favourable tax treatment since the benefits are not taxed,” the firm added.
