Factors affecting voluntary retirement schemes contributions among employees in the formal sector in Nairobi County: A case of selected firms in Westlands Sub-County
Keywords:
Pension, Pension Literacy, Retirement, Savings, Savings Plan, Social Security, Tax Incentives, Withholding TaxAbstract
The government is responsible of delivery of efficient public amenities to senior citizens as part of self-reliance during the retirement period. The government of Kenya has put in place policies such as tax
incentives for savings directed towards retirement schemes. However, these policies have been in place for quite a while. A significant percentage of the working population; 80 percent, are not covered in any of the schemes available. Only 15 percent of the 20 percent covered are confident that they have
enough savings to keep them through their retirement life. This study sought to find out the factors
affecting voluntary contributions to retirement schemes in Nairobi County and specifically Westlands
sub-county. A cross-sectional descriptive research design targeting a population of approximately
7,300 and a sample size of 153 employees selected using purposive sampling in the formal sector was
used. Data was analyzed using descriptive statistics (Pearson correlation coefficient) and inferential
statistics. Tax incentives had no statistical significant influence on contribution decision to retirement
scheme (β = 0.0796, P = 0.0502) among the respondents. Financial literacy (β = 0.6489, P = 0.0315)
demographic components age (β = 0.1276, P = 0.0222), income and level of education (β = 0.1076, P
= 0.0002) were significant at 95 percent confidence interval. The study recommends the need of
government to sensitize on savings facilitating measures in place with formulation and/or
implementation of relevant policies by agencies with development of financial literacy training
programs to foster retirement preparedness.
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