Effect of Financial Literacy on Voluntary Retirement Planning Among Employees of State Corporations Under the Ministry of Health in Nairobi County, Kenya

Abstract

Purpose - The study sought to determine the effect of financial literacy on voluntary retirement planning among employees of state corporations under the Ministry of Health in Nairobi County, Kenya.

Methodology – This study adopted a descriptive study design and uses primary data collected using a questionnaire with a five point Likert scale on the parameters of each variable. The study applied simple random sampling technique to select respondents to participate in the study. Data is analysed using means, percentages and frequencies. Multiple regression analysis was used to test the relationship between financial literacy and voluntary retirement planning.

Findings – Financial literacy was found to influence the level of voluntary retirement planning among the employees since they are able to make key decisions that involve money in such a way that there is minimal risk to them. The study also established that financial literacy has a positive impact on voluntary retirement planning, however the results indicate that other factors such as income levels, age, marital status and level of education are also strongly related to retirement planning.

Implications – To boost the voluntary retirement planning process, the eventuality of retirement should be made obvious for all the employees in the Kenyan economy so as to influence peoples’ attitude and receptiveness to the process. There is therefore need to develop financial education programs that focus particularly on important financial planning aspects for employees that will help them strike a balance between consumption and saving.

Value – The findings of this study would also be valuable to the Retirement Benefits Authority and the Government of Kenya in development of policies and regulations