Private schemes to battle for slice of pension billions 

The Retirement Benefits Authority (RBA) has cleared 84 private pension schemes to handle National Social Security Fund (NSSF) tier-II contributions.

This sets the stage for the private pension schemes to battle the NSSF for the control of billions in new pension contributions created from the implementation of the 2013 NSSF Act whose implementation began at the end of February.

“84 registered retirement benefits schemes have been approved to receive tier II contributions as of June 21 in accordance with the provisions for a reference scheme test in the fourth schedule of the NSSF Act 2013,” RBA chief executive Charles Machira told the Business Daily.

Among schemes cleared by the regulator are CIC Life Assurance, Octagon Africa, Enwealth Financial Services, Britam, CPF Financial Services, Zimele and Old Mutual.

An employer is empowered to choose to pay tier-II contributions to a private pension scheme or the NSSF.

Read: 13.9m Kenyan workers have no pension: Data

The tier-II contributions are secondary deductions made by persons with incomes above Ksh18,000 ($127) at Ksh720 ($5) a month with the contribution being matched by employers.

Tier-I contributions, which are set at Ksh360 ($2.56) a month and matched by the employer are mandatory and remitted to the NSSF. Tier-II contributions have been estimated to yield Ksh12.43 billion ($88.25 million) in new pension funds during the first year of the 2013 NSSF Act implementation up to June 2024.

Just like private retirement schemes, employers are also required to apply to the RBA to channel contributions outside the NSSF.

According to the RBA, more than 300 employees have so far applied to opt-out making the secondary contributions to the NSSF with the regulator giving the nod to 163 of the applicants by issuing them with contracting out certificates.

The RBA notes the demand for clearance for both retirement schemes and employers has been high with the regulator easing concerns over the dominance of the NSSF over private pension schemes in the control of pension contributions.

“We have continuously advocated for increased contributions to schemes to address concerns on the adequacy and to provide higher income replacement rates,” said Mr Machira.