Retirement is a reality you cannot run away from. There are various ways to plan for your retirement one of them having a Pension Fund among other investments.

Pension is a fund which contribution is made regularly to a registered scheme with the Retirement Benefits Authority, RBA. This contribution is made during your active work life to cater for your income during your old age. Registered schemes in Kenya are published on the RBA Website https://www.rba.go.ke/registered-schemes/ . Either employed or in business it’s important to plan for your retirement by having a pension plan.

The average interest rate of return on pension schemes in Kenya is around 10% while the minimum guaranteed interest return on your fund is 4%. Below we have listed some of our partners offering good returns as per data from Association of Kenya Insurers, AKI.

Why is it important to have an individual pension plan?

  1. It is inevitable that one day you shall retire from active work engagements thus sources of income may reduce but the bills like food, medical bills, electricity, and fuel will keep rising constantly.
  2. A pension fund has a minimum retirement period that one can access the funds saved thus it’s a disciplined way to save for later days while earning an average growth of 10% on your fund.
  3. Due to modernization, cost of living and changes in society values unlike the Africa Traditional system, it’s now a reality as a parent that as you grow old, it may no longer be possible to depend on your children for upkeep. Thus it’s very wise to plan for your own retirement.
  4. There is a tax relief advantage whereby contributions to a pension scheme is tax exempt as per the set limit of Kshs 20,000 per month or 30% of your salary whichever is less and the return earned as interest is also tax exempt.

Key Features of pension schemes

  • Contributions to pension scheme have a 100% capital guarantee. Pension is a guaranteed fund the only variation is on interest returns.
  • Pension plans are flexible in that you can increase or vary the amount of contributions at will depending on your financial capacity.
  • You will be receiving an annual statement to show how your retirement fund is growing
  • You can switch the fund from one scheme to another depending on preferences and performance
  • You can secure mortgage of up to 40% of your pension value with a maximum upper limit of 7 million. This gazettement was made vide Legal Notice 192 dated 14th September 2020 after approval by parliament.
  • Your pension fund is safe as long as you join a pension scheme registered and regulated by the Retirement Benefits Authority of Kenya, RBA.
  • You can access your retirement benefit from an age of 50 years which will attract tax according to the current law while the fund is tax free from the age of 65 years.
  • In case of death before retirement, the accumulated fund is given to your Family or appointed beneficiaries.

What to do with a lump sum Pension fund payout.

Can I transfer my Pension from a previous employer’s scheme?

  • This is a question clients have been asking us, the answer is YES.In most cases, when employees switch from one employer to the other, or even quit employment to pursue business or other ventures, they forget to consolidate their pension fund. This is a common omission and by the time one attains retirement age, you end up getting challenges tracing where your previous employers pension schemes were transferred to or even forget you had a pension fund. Thus it’s very important to consolidate all your pension to an Individual Pension Plan immediately you change employers or quit employment. This will enable you monitor how your pension fund grows.As per the current regulation, once you quit employment you can only access 50% of your fund and the rest has to remain with the scheme or better transfer it to your preferred Individual Pension Plan, IPP. We are here to help you consolidate your Pension funds.

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