This is a savings scheme established by an employer with the principle objective of providing employees on retirement, or for their dependants on the death of the employees, with funds to live on.
KRA and RBA Registration The Pension schemes Funds must be registered by the Retirements Benefits Authority and may be registered by the Kenya Revenue Authority in order to enjoy Income Tax relief.
The key features of the Income Tax Act Relief are:
- Contributions: The aggregate contribution in any one-year of income should not exceed 30% of the employee' gross income. The maximum tax-deductible amount on contributions into a registered pension scheme fund is Kshs. 17,500.00 per month or Kshs. 210,000.00 per year. Participating employees can choose to make voluntary and optional contributions that will enhance their accumulated benefits.
- Vesting of Employer Contributions to Employee: The Income Tax Act requires that an employee must be 100% vested after completing 3 years of Pensionable service.
- Trustee/Member Relations: The minimum number of Trustees at any one time should be Three, one third of which should be nominated by the members
The Benefits of our Group/Occupational Pension Scheme are as below:
- We have an excellent track record in pension scheme administration.
- We have superior computer systems, resulting in prompt and efficient service.
- We provide superior administration service to clients, unmatched by the competition.
- Our stability, coupled with above strengths distinguishes CfC Life Assurance as the preferred choice to administer your fund.
- Each member is provided with an annual statement of account, which reflects the total accumulation and contributions made by both the member and his/her employer, and the interest credited to date.
- On a regular basis, we keep the Trustees and Members up to date on all events which affect the administration of the scheme or which impact on the interests of the members of the scheme.
- We attend meetings of the Trustees on a regular basis.
How do you join the scheme?
The installation of a scheme requires an initial census of plan participants, which we do initiate. Enrollment forms are completed so that membership certificates are issued to all members as evidence of their participation in the scheme.
In addition to this, we do prepare and issue an initial Handbook that summaries some of important features of the Scheme
Members may also enjoy the benefit of counseling services when needed in relation to their vested or accrued benefits, annuity options or benefit payments.
Advisory services may also be extended to beneficiaries and personal legal representatives of plan participants on request. We will work with your Pension Plan Administrator to ensure that the records of the plan participants are correct.
- Pension for life or minimum guaranteed period will be purchased by the total accumulated contributions by the employee and employer plus accrued interest thereon.
- You may take the cash commutation of 1/3 or ¼ of accumulated benefits depending on whether a scheme is contributory or non-contributory. thereafter, annual pension up to a maximum of Kshs.180, 000.00 per year is not chargeable to tax. The balance in excess of Kshs.180, 000.00 p.a. will be subject to a withholding tax.
Pension Funds ReturnsOur asset and broad financial base produces opportunities for deposits to achieve consistently high rates of return while minimising investment risks.
Very prudent investment policies and guidelines are followed. Funds are segregated from other invested assets and invested in instruments whose returns are reasonably high and stable.
Interest Crediting Rates
CfC Life's interest rates declared for the last five (5) years were:
- 2006 - 11.00% p.a. on all funds.
- 2007 - 9.50% p.a. on all funds.
- 2008 - 5.00% p.a. on all funds.
- 2009 - 6.00% p.a. on all funds.
- 2010 - 10.00% p.a. on all funds.
- 2011 - 3% p.a. on all funds.
- Guidance in Plan installation
- Plan documentation/registration
- Record keeping and accounting
- Issuance of membership certificates and statements
- Investments/Asset management
- Issuance of annual Fund(asset) valuations
- Provision of employee information booklets
- Provision of counselling and consultancy services where required at no extra cost
- Communication and updates of changes legislation that may affect the scheme operation and/or investmentsLeaving service prior to retirement age
If a member leaves before the retirement age, he may do one of the following:
- Leave his contribution in the scheme and receive a deferred pension purchased at the normal retirement age.
- Transfer the accumulated benefits to the scheme of his new employer.
- Transfer accumulated benefits into Individual Pension Plan.
Both the Income Tax Act and Retirement Benefits Authority rules do not allow a member to withdraw from the scheme whilst still in the employment of the current employer.
- Normal Retirement - This is as per employers guidelines.
- Early Retirement - Members who are 50 years or over can retire early with the employer´s agreement.
- Health early retirement - A member who retires because of serious and permanent ill-health will be eligible to receive a reduced pension based upon the contributions paid towards securing his pension by him and the employer, up to the date of retirement.
- Late retirement - If it is agreed between a member and the employer that retirement is to be deferred, the employer and employee contributions will continue until actual retirement date.