Background of the study

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is the stage to which an individual parts with the employment life and may
either decides to engage in other development activities (Mbugua, 2017). This
encompassed with Pension funds which is the offer given to the retiree which is
the principal sources of retirement income for millions of people in the world
(Sze 2008). Retirement income accounts for 68% of the total income of retirees
in Kenya (Kakwani, Sun and Hinz 2006), 45% in Australia, 44% in Austria and 80%
in France while in South Africa 75% of the elderly population rely on pension
income (Alliance Global Investors 2007). Retirement should therefore be managed
be well developed in order to review the age to which and to what extent an
individual should be allowed to rethink of their past and future in work place.

indices should be felt by the retiree when it comes to the age to which they
are supposed to be deemed free from work place. Recent indicators have shown
that when the retirement age has been under debate which has not bore any fruit
and therefore bringing a contradiction to which limit individual must be freed
from public or private work station (Kenya’s magazine, 2013). Due to this, Global
indices indicate that pension assets as a result of retirement are important to
any economy and therefore there should be thorough consideration when it comes
to the issue to which the retirement should be coupled to.

According to
Alliance Global Investors (2007), retirement should be considered not as the
end to work but new invention to alternative section of work under the new
invention ceasation. In the recent arising economic situation in Kenya and the
whole world at large, ret5irement should be thoroughly be revisited in order to
set an alternative way to which the retiree should be considered as another
dispensation of new economical developers so as to articulate the situation of
the emerging diversification of service delivery. The amount vibed via the
scheme referred to as Pension funds are therefore important contributors to the
GDPs of countries and should consequently be managed effectively.


The global retirement
crisis has threatened to erode contributions that pension funds make to the
world economies (OECD 2008). The crisis manifests in countries that have
inadequate funds to cater for the retirement income of the ageing
population as a result of depressed financial markets. Effective retirement
should therefore be pension fund investment strategies are needed to ensure
that pension fund assets are protected against externalities in the investment
universe. Old age poverty rates are increasing in the 21st Century. The Institute
for Pension Supervisors (IOPS) (2008) estimates the old age poverty rates inclined
due to lack of well elaborated schemers to enhance the arena to which it should
be under impaction. Therefore this study will consider the way to which pension
should be rethought of so as to hinder the barriers which are posed by the
influence of haustened by the retirement arena.

Retirement money which
is Pension funds should be  expected to
increase the replacement rates (percentage of retirement income to pre-retirement
income) (Sze 2008:6; Aon 2005a; Mitchell and Phillip 2006:39; Kakes and
Broeders 2006:8; Bettendorfa and Heijdra 2006:2391). Although no statistics are
indicated, IOPS expects the replacement rates in African countries to be much
lower than the selected countries. Pension funds should therefore be managed
effectively to increase the replacement rates.

The United Nations estimates that by 2050, there will be almost 2
billion people over 60, worldwide, close to 80% of them will be living in
developing countries. According to Help Age International (2006), the over 60s
and the over 80s represent the fastest growing population group on the African
continent with the numbers of elderly people increasing by 50% between 2000 and
2015 and nearly fivefold by 2050. Research on retirement pension fund
efficiency is therefore needed to ensure that the elderly population does not
fall into the poverty trap after retirement.

of the Problem

In recent years retirement has not been
well dicted in order to phrase the level to which its standards to which retiree
should be proud of (David, 2017). This has been a rising call to rethink which
ways should be implemented in order to improve the standards to which it should
advanced in order to make it better from the worse stage that is alarming to
date. Studies on the retirement age platter has been an alarming issue in the
recent past due to poor implementation to which this stage of work deemers
should be awarded and therefore this has led to poor branding of the retirement
scheme and hence tinting the previgued the limed aspect of retirement benefits
(Dulebohn 2015) or compare the pension fund returns with the market indices
(Stanko 2012; Bikker and Dreu 2009). The use of Data Envelopment Analysis (DEA)
has been documented as a more superior technique of analysis of efficiency
(Cinca, Mal Morinero and Garcia 2002; Barros and Garcia 2006) since it enables
the ranking of the institutions being evaluated and generates scores for
inefficiencies. Very few studies have used DEA to measure pension fund
efficiency as a result of retirement benefits. The present study intends to
consider the issue of rethinking about the retirement in Kenya due to the arena
to which the retiree have been not considered as an important factor in the 21st
century retirement aging group after work possession. In addition to the
operational measures and identify the explanatory variables for the efficiency

Objectives of the study

      General objective

The general objective of the study will be to
investigate about the rethinking of the retirement planning in Kenya.

   Specific objective

analyze the effect of education level to retirement planning in in Kenya

To determine the relationship between age and retirement planning

To investigate the relationship between investment strategy and
retirement planning efficiency.

Research Questions

What effect does education level have on retirement planning efficacy?

Do the age and the retirement planning efficiency have any relationship?

What is the cordial relationship does investment strategy and retirement
planning has?

Justification of the Study

to retirement advisors (2016), Retirement planning is the process of planning
and managing your short and long-term finances to help achieve your financial
dreams both during your working years and retired life. It involves analysing
your financial objectives, current financial position and expected future cash
flow to develop a comprehensive retirement roadmap. This study will therefore
be of significant to different groups which includes


Elderly people

findings of the research will enable the elderly people who are the beneficially
of the pension in redesigning the strategy to which they need to approach the
government bodies in enhancing their say when it comes to the issue of
retirement. This will be because of the issue of loops to which their fund drive
to some extent does not engulf to their pockets after disbursement by the


will also benefit from the study since it will create awareness on them on how
their employer is supposed to reward them when the time of retirement they are
expected to be sent off work. In addition, they will benefit from the study as
they give feedback on their involvement in strategy formulation on when they
are expected to retire. This will highlight the importance of employees
involvement in order to rethink what best suits them when it comes to the issue
of retirement. The study will have further outlined the benefits derived from what
is termed as Pensionable salary and wage.














need for retirement planning is a question being impressed by many countries in
the world. (Johnson, 1987)Retirement has been defined as “an
event, a formal departure from paid work that occurs on a given day, a status
with new rules to learn and a process that begins the day an employee
acknowledges that the worker role will end”.

planning is the process of determining retirement income goals and the actions
and decisions necessary to achieve those goals. The importance of retirement
planning is known as a preparation for the changes accompanying retirement
that’s was related to a host of affective behavioral adjustment indices (Taylor, 2003). The most common
financial goal amongst many individuals is the necessity for saving and
investing for retirement. Most would like to retire with the stability to be
able to at least maintain their living standards after many years of work. The
downside is that many start planning for their retirement five to ten years
towards the end of their career.

begun to reform the retirement benefits industry by the establishment of RBA to
guide the developments within the industry. The government established RBA in
1997 by the introduction of the Retirement Benefits Act (1997). This was a
significant development since there were private and public pensions and
provident schemes operating in the country without clear regulatory guidelines.
In addition to securing the funds of contributors, it became more evident that
the industry was significant growth area that had been neglected for a while
and there was need for structural changes in management.

the largest government pension fund was established under an Act of Parliament
in 1965. The first contributions, from men only were received in July 1966. At
its formation the larger employers such as the Civil service, Kenya Railways,
Kenya Post and Telecommunications Corporation and others continued to maintain
unfunded schemes under retirement schemes.However in the 1970’s private
contributory retirement plans started taking form.Female employees first
registered in January 1975 but started contributing in 1977.The NSSF Act was
amended in 1987, thereby transforming the fund into a State Corporation under
the management of a board of trustees. The NSSF is established as a provident
fund operating on a defined contribution basis. In 1997 NSSF Act was amended
and this led to defining NSSF as a retirement benefits scheme and thus brought
the NSSF into the regulatory framework of the RBA.

(Odundo, 2003)report on Supervision of public pension
funds in Kenya he points out some of the loopholes in the Kenyan social
security system. He points out the fact that the fund is faced with numerous
challenges that are deeply entrenched in the operations of the scheme and which
negatively impact investment returns. One of the main challenges is the fact
that our investment profile is characterized by a lack of diversity: an
overwhelming 72 percent of assets far greater than the recommended 30 percent
are held in real property. Returns from these assets are low, and liquidating them
would offer little relief since the property market is depressed and the
likelihood of recovering costs is poor. Further (Odundo, 2003) points out the fact that NSSF Kenya is
faced with poor record keeping. This has led to delays in determining benefits
precipitating a US$100 million unallocated suspense account. The afore
mentioned issues have led to a number of strategies being put in place to try
and better the operations of NSSF first the Retirement Benefits Act has been
introduced in part to address these issues by requiring the adoption of
international fund management practices. Also on the part of management the
introduction of the trustee training requirement in 2011 is also a big step
that will ensure that the scheme funds are managed appropriately. On the
regulations part, RBA also calls NSSF to be compliant with its regulations as
the regulator of all retirement benefits schemes in Kenya. The above concerns
have also led to the major pension reform in Kenya; the proposed 2012 NSSF

2.1 AGE

planning for retirement one should take into consideration both human and
financial capital. (Becker, 1993) Human capital is a measure of the economic
value of an employee’s skill set, it is mostly ignored in retirement planning.
Financial capital, unlike human capital, is any economic resource measured in
terms of money, for example stocks and fixed deposits.

younger one is the higher the human capital, as one has more years to receive
income in terms of salary, and as one ages the human capital reduces and one
relies more on financial capital. Retirement means that income supply is cut
short while expenses continue to build. The only way to survive retirement is
by starting to save at an earlier age. NSSF is not enough. Think of how much
you contribute monthly versus how much you need to survive, let alone be
comfortable. Would it not be rewarding to know that you can rest easy with a
roof over your head, food to eat and your children’s future covered. In order
for one to be independent after retirement, one should have at least 40% of
current income as regular income. The average salary per individual per month
currently stands at Kes 147,950 so after retirement one should be earning at
least Kes 59,180. You need to ask yourself what you are doing towards this.

interesting fact is that 6.5% of Kenya’s population is above the age of 55.
Within the next 5 to 10 years, that number will have tripled a scenario where a
majority of these will not have a prudent pension plan will mean that the
country will face dependency issues.

Education Level

with higher education have more knowledge on financial and pension matters(Hastings, 2011)they attribute the
finding to the lack of understanding on basic concepts. Moreover,
financialknowledge imparted on the young people form a basis for them to
continue with similar education in to the middle age a higher level of
education attainment leads to a higher likelihood of participating in a pension
plan since financial literacy and schooling are significantly correlated. In
concern to education, there is a need to reward the highly educated persons who
are in the virge of retiree and rethink what they are expected to undertake
after retiring. It is quite recommendable to engage them in dialogue to come up
with a variety of ideas which could be result to experience diversification and
thereby enhancing their feasibility to the demeaned rising generation.
















This chapter indicates the instruments and
methods that the researcher will use to carry out the study. It describes the
steps activities and instruments the researcher intends to gather information through
data collection. It will focus on the research design, population, sampling
techniques, data collection procedures and data analysis techniques.

Research Design

researcher will adopt descriptive research design study where data will be
gathered just once. The data to be collected will be for the period of one week
in order to get the first hand information from the study case. Descriptive
study designs will be concerned with describing the characteristics of a
particular individual, or of a group. It is concerned with specific predictions
and narration of facts and characteristics concerned with individuals, group or
situations. The advantage of the design is that it allows flexibility in data
collection. According to Kothari (2005) descriptive research design includes
surveys and fact finding enquiries of different kinds. Descriptive research
describes the state of affairs as they exist at present. In descriptive studies
the researcher must be able to define clearly, what he/she wants to measure and
must find adequate measures of finding it along with a clear cut definition of
“population” he wants to study.

Population and sampling

A population is a complete set
of individuals with the same common observable characteristics Mugenda and
Mugenda (2007). Target population is the portion of the total population from
which the study draws its respondent components. This study will target elderly
people within wangige market who decided to participate in Business activities
after retirement it will compose of 40 individuals whereby they are competent
in the business world. A sample is a small section of the largest population
which has been selected for analysis. This sample will be
considered representative of the target population of interest as it satisfies
the requirements of efficiency, representativeness, reliability and other
factors like nature of units, size of the population, and the time available
for completion of the study (Kothari, (2005). The study will adopt the use of stratified random
sampling method where all the target respondents will be considered in the
study as source of primary information since the target population is small and
thus manageable. This sample of 28 will be extracted from the target population
of the study

Data collection

There are two types
of data primary and secondary data. Primary data is data collected from the
surface or observation while secondary data is data collected from previous
studies. Primary data will be collected using the questionnaire. The
study will be  facilitated by use of
primary and secondary data that will 
extracted from published reports of the pensionable plans of the  retiree so as to encounter the situation of
the challenges they do encounter when they retire and what ought to be done

Data Analysis Technique.

The data
that to be collected from the questionnaires will be verified and checked for
reliability. The data will then be analyzed using descriptive statistics such
as measures of dispersion that is frequency and percentages as well as measure
of central tendency such as mean. Presentation of results will be done using
tables also incorporate the use of excel software so as to enhance easy
interpretation of the information.






G. S. (1993). Human Capital: A Theoretical and Empirical Analysis, with
Special Reference to Education (3rd ed.).
Hastings, J. M.
(2011). Financial Literacy and Pension Fund Fees.
Johnson, E. S.
(1987). Retirement in the United States. Retirement in an industrialized
Odundo, E.
(2003). Retirement Benefits Authority. Kenya on pension reforms. World
Bank. Retrieved from
Taylor, M. A.
(2003). Retirement Planning and Preparation. New York: Springer
Publishing Company, Inc.





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