Last month, one of my patients walked out of his office for the last time in a Civil Service career spanning 42 years. He finds himself upcountry after decades as a city “economic refugee”, but now without a job and the comforts a regular salary buys.
Though he has a house and a farm, his two worries are how he will adjust his lifestyle and cater for his frail health — he has hypertension, diabetes and prostate issues all requiring regular visits to the doctor. No private insurer is willing to offer him a cover due to his age and his employer’s has lapsed.
For a while now, the health system has been urging pension funds to consider investing in healthcare to address an estimated 65 per cent of pensioners’ like him whose retirement benefits get gobbled by hospital bills. We have sadly not achieved much success.
The Retirement Benefits Authority (RBA) puts the value of assets managed in the sector by 2014 to be Sh788 billion with a 14 per cent annual growth. Quite a sum! By 2019, it projects this to reach Sh1.02 trillion accounting for between 17-30 per cent of gross domestic product in 2030.
Old age is a particularly illness prone period and rising life expectancy means many retirees are living longer.
The RBA’s 2014-2019 strategic plan seems to recognise this and “acknowledges the need to allow members use their pensions to access health and education services”. To what extent this is happening is not ascertainable.
Our pension industry’s investment of managed funds in the 2014 financial year report shows that government securities got 33 per cent, equities received 25 per cent, about 17.20 per cent went to immovable properties, guaranteed funds got 10.26 per cent, while fixed income and deposits took the remaining funds.
While all these avenues provide returns, whether they are the ideal vehicles is debatable at least from a ‘social-good’ viewpoint. Is it possible for pension funds to invest members’ contributions in a win-win scenario?
Health entrepreneurs are starved of capital, most of such projects being safe long-term investments such as hospitals that importantly serve many retirees and pensioners.
My discussion with the patient wandered to how his retirement benefits could have helped him cater for his healthcare. As presently structured, our pension schemes ensure retirees remain out-of-pocket health services’ payers on retirement, a very expensive affair.
Properly utilised, they can finance capital-intensive healthcare projects such as hospital construction, homes for the aged, heavy equipment like MRIs etcetera?
In return scheme members then access subsidised services in such facilities while the funds earn income from the investments. Such projects easily fit into the ‘immovable property’ and ‘fixed income’ component of their portfolios.
It is time pension contributors started discussions with medics, the Central Organisation of Trade Unions, RBA and the National Social Security Fund. It won’t hurt anyone if they divest into health services for their elderly clients.