Financial Knowledge on Annuity Uptake Among Retirees of Insurance Companies in Kenya

Abstract

Access to financial management skills and general education programs is part of many challenges encountered by individuals in their quest to improve their level of knowledge on saving for retirement lifestyle. The study determined the effects of financial knowledge on annuity uptake among retirees of insurance companies in Kenya. The independent variable was financial knowledge while the control variables were gender, age, marital status and income. The study employed descriptive research design. The target population was 8,637 retirees from the 54 insurance companies in Kenya. The results were analyzed using social sciences (SPSS) computer software Version 25.0. Demographic results indicated that majority of retirees were males. Majority of the retirees were married. It was also established that majority of retirees had gross monthly income of KES 150 000 and below. The Cox & Snell R Square was fair at 46.2% implying a fair model fit. Multivariate logit results showed that age was statistically significant in relation to annuity uptake. Age differences irrespective of gender are more likely to influence annuity uptake. Marital status was also statistically significant in relation to annuity uptake. Further, income was statistically significant in relation to annuity uptake. Financial knowledge was statistically significant in relation to annuity uptake. Financial knowledge has the strongest effect on annuity uptake and is strongly associated with an increase in annuity uptake. The study concludes that demographic characteristics of retirees are associated with annuity uptake. Gender, age, marital status and income are likely to influence annuity uptake of retirees. The study revealed that demographic characteristics of retirees are associated with annuity uptake. The demographic features include gender, age, marital status and income. In terms of gender, women are thought to be more likely to make contribution after retirement. However, the findings should not be generalized to all genders as life situations and other factors differ significantly among retirees irrespective of gender. The study therefore recommends for intensive awareness on annuity uptake among men and women retirees to improve annuity uptake after retirement. The study recommends for proper awareness training on the importance of continuing paying annuity premiums after retirement. The awareness should state that paying annuity is important for all retires in different age brackets because life disturbances are unpredictable and do not affect particular age group more than another. The unmarried persons, divorced and widowed persons are often psychologically traumatized and may stop making payments after retirement. The study recommends for proper guiding and counseling sessions to be offered by respective insurance providers to these groups on the need to continue contributing the premium despite the problems that befell them. It is worth noting that being married means you are not psychologically disturbed and recommendations are also applicable to married couples. The study recommends that proper financial awareness on savings is required for employees before they retire from active work to ensure that the retirees have sufficient to meet their needs after retirement.