Employees perceptions towards saving for retirement and their effect on employee commitment
The purpose of this research project is to find out the perceptions employees hold towards saving for retirement among different age generations, whether they consider it important and necessary to save for retirement or not, and their effects on employees commitment to organizations. The researcher selected to carry out her study specifically on the banking industry in Kenya because it is a major contributor to the economy and it has a large workforce (since it absorbs a lot of talent from the universities and colleges from within and out of the country). It provides a good population mix of individuals in different age groups (Baby Boomers, Generation X and Generation Y) who are suitable for this study. This industry has also been selected because it has several banks of different sizes which carry out different initiatives with regards to retirement saving, thus providing a good basis for my study. The specific objectives of this research were (a) to establish whether employees among the different age generations in the banking industry perceive it necessary to save for retirement, (b) to establish whether saving for retirement when offered as a benefit by the employers, has any effect on employees’ commitment to an organization and (c) to identify what are the preferred methods of saving for retirement by employees of the different age generations in the banking industry. The respondents of this research were selected from thirteen (13) banks in the Kenyan business market that have undergone mergers over the period of the last three years. Out of a population of 31,636 employees in the banking industry, using stratified random sampling and simple random sampling in each stratum, a sample of 150 respondents was selected to participate in the research. 135 respondents completed and returned their questionnaires. Findings and conclusions of the study indicate saving for retirement is necessary and important for employees in the different age groups, though the level of saving varies per age group. Retirement saving is determined by various factors including the level of income and the current financial needs to be met; Saving for retirement has an effect on employees’ commitment to organizations. Employees’ commitment to organizations increases as they grow older and are keener on their retirement savings, therefore they want to remain committed to an employer who provides retirement saving benefits; There are preferred methods of saving for retirement among the different age groups. The younger people prefer to save in short-term quick returns investments while the older individuals prefer to save in longer-term investment plans that offer more security and investment return. Arising from these conclusions, recommendations made include the need to undertake more initiatives to increase the awareness on the necessity and importance of saving for retirement, especially among the Generation Y employees; Organizations need to introduce initiatives that will encourage employees’ commitment to organizations; and the need to increasing financial literacy among employees of the different age groups so as to enable them make wise financial saving decisions. Further research is required with a focus on the investment initiatives being undertaken by employer sponsored retirement schemes. This study brought out that employees undertake other saving initiatives away from their employer sponsored schemes so as to increase their investment return. This indicates that either the employer sponsored schemes are not aggressive in their investments patterns resulting to low returns or the schemes are not being well managed. The study on investment initiatives being undertaken will also help in bringing out the preferred saving options that employer sponsored schemes can incorporate in there schemes so as to encourage more retirement saving among the different age groups of employees.