Pension Scheme

In the year 2005 Budget Speech, among the major changes introduced was an amendment to Retirement Benefits Regulations (Occupational Retirement Benefits Schemes) 2000, introducing the compulsory preservation of employers’ contributions for scheme members who withdraw before attaining retirement age.

The Regulations have now been amended. In the new regulations published by Finance Minister, members of pension schemes will not have to wait until they reach retirement age to access their employers’ contributions.

Following the amendments, the Retirement Benefits Authority has issued the following clarification to the public:-

1. That any existing deferred member of a scheme, whether before or after the amendment of the said Regulation, who has not attained early retirement age and who had left employment after serving three years with the sponsor may;
2. In the case of a defined contribution schemes, opt for payment of one hundred percent (100%) of their own contribution and fifty percent (50%) of their employer’s contribution and the investment income that has accrued in respect of those contributions.
3. In the case of a defined benefit scheme, opt for payment of not more than fifty percent (50) of the accrued benefits, as shall be defined by the actuary.
4. A member of a scheme may opt for payment of the total amount of the vested accrued benefits before attaining the retirement age:-
5. on grounds of ill health or subsequently during deferment, if the member becomes incapacitated due to ill health, to the extent that it would occasion such member’s retirement if still in employment; or
6. if a member has emigrated from Kenya to another country without the intention of returning to reside in Kenya and the trustees have approved the payment of the retirement benefits and submitted, fourteen days prior to payment of the benefits, the approval to the Retirement Benefits Authority

The implication of the amendment is that all persons who had already left or will subsequently leave employment after three years of membership may, in the case of Defined Contribution Schemes, opt for payment of one hundred percent (100%) of their own contributions and fifty percent (50%) of their employer’s contribution and the investment income that has accrued in respect of those contributions. In case of defined Benefits Schemes, scheme member may opt for fifty percent (50%) of the total accrued benefit.