Pension schemes in Kenya are increasingly becoming important for individuals who make savings in the insurance sector. The best savings for a person who wants to retire gracefully are those invested into insurance companies, especially pension schemes. This money attracts handsome interest rates such that your lump sum amounts after the maturity of the plan is enough to sustain your life forever.
Before you decide which insurance company to sink your money into, you must consider the following:
- Stability of the insurance company
- Where they invest your money
- Whether the company is regulated
- Reputation of the company
Having done background checks, you will then come to conclusion that the following insurance banks meet the cut off:
- Britam
Britam stands as among the few trusted insurance companies for pension services. The insurance firm offers individual pension plan, which has the following features:
How Does The Plan Work?
The plan allows you to first build your retirement income by making regular contributions during your working life. This allows your savings to grow exponentially over time while earning interest.
On attainment of your selected retirement age, Britam will pay your accumulated retirement benefits in accordance to the option selected at the inception of the policy.
What Options Do You Have?
a. Pension plan– A third of accumulated benefit will be paid as a single lump sum amount and
the remaining two thirds –
1) Paid as a regular income for life upon retirement.
2) Can be withdrawn from the fund in a minimum of 10 years.
- Provident plan-The accumulated amount will be paid in one single lump sum upon retirement.
What Are The Key Features Of This Plan?
- Flexible contributions: Contributions can be fixed or varying; made monthly, quarterly, semiannually or annually.
- An employer can contribute an equal or higher amount as an employment incentive.
- The minimum contribution under the policy is Kes 500. There is no upper limit on contributions.
- Britam will provide you with a personalized individual retirement plan account and keep track of your savings and interest earned.
- A personalized statement of savings will be sent to you at the end of each financial year or any other time on request.
- A member can access accumulated fund at any time subject to the prevailing regulations.
What are the key benefits of the individual retirement plan from Britam?
- Monthly contributions are tax deductible. The current tax exempted amount is Kes 20,000 per month or 30% of pensionable income, whichever is lower.
- Investment income: Contributions are prudently invested to ensure high returns with a guaranteed minimum compounded rate of 5% per annum.
- The capital is guaranteed against market volatility, therefore securing the fund.
- Portability: The plan is portable and is not affected by changes in employment.
- Flexibility: One can select retirement age, amount and frequency of contributions, change/nominate beneficiaries etc.
- Availability of pension backed mortgage: A member can assign up to 60% of the accumulated fund towards financing the purchase or construction of a house.
- In case of death prior to retirement age, the total accumulated amount becomes payable to appointed beneficiaries.
Other Value added services:
- Britam will keep you informed of the changes occurring in the pensions industry.
- Britam Individual Pension Scheme is approved to receive NSSF Tier II contributions.
How do you join?
- Download the application form from Britam website
- Provide a copy of ID/Passport.
- Provide a copy of PIN certificate.
How do I pay?
- M-pesa – Paybill Number 541400
- Check-off
- Direct Debit Authority
- JUBILEE INSURANCE
Our second company in the list is Jubilee Insurance, which is also known for providing the best medical cover in Kenya. The personal pension plan by Jubilee Insurance has the following features
The Jubilee Insurance Personal Pension Plan is a savings plan tailor-made to allow individuals secure their retirement. By making regular contributions into an interest bearing fund, you build your retirement fund while taking advantage of the tax-deductible benefits on your contributions and your investment income.
To join the plan ,you are required to fill a one page application form, attach a copy of your identification document (ID or valid passport) and pay your first contribution to set up your account.
How do I pay the contribution?
Based on your circumstances and convenience, you may pay your contributions by cheque, banker’s standing order, salary-stop order, Mpesa (Business No. 328103, use your ID/passport no. as your account number) or pay cash to Jubilee offices. You may contribute on monthly, quarterly, half-yearly or annually.
How much is tax-deductible?
Currently the Kenya Revenue Authority allows a tax exemption of Kshs.240,000 per annum (Kshs.20,000 per month) on the contributions. E.g. an individual earning Kshs.50,000 and making a monthly contribution of Kshs.5,000/= will be taxed on Kshs.45,000/=.
- Can I increase or decrease my contributions?
- Yes, our Plans allow you to increase or decrease your contributions as your situation permit.
How are my funds invested?
We take a prudent approach to invest your retirement funds. Security and sustainable long-term returns are key investment objectives. We aim to maximize returns on your contributions while providing you a guarantee on your accumulated fund.
How can I monitor my fund?
We provide an annual statement that reflects your total fund and interest earned.
At what age can I retire?
The normal retirement age in Kenya is 60 years. However, you may retire as early as age 55 or even later than age 60 depending on your circumstances.
How much will I get at retirement?
The accumulated fund is available to you at retirement to purchase an annuity. The fund may also be taken as a lump sum subject to Income Tax deductions and the Retirement Benefits Authority guidelines.
What if I die before retirement?
The total fund accumulated at the date of your death will be payable to your dependents.
What will happen if I am disabled?
In case of early retirement due to ill health or disablement the accumulated fund at the date of early retirement is payable.
Can I withdraw my fund from Jubilee Insurance before retirement?
You may terminate the contract and withdraw the fund at any time. However, the fund will be subject to any taxes payable and locking-in of the benefit arising from the employer’s contributions.
Can I transfer my accumulated fund to Jubilee Insurance Personal Pension Plan?
Yes, by providing your former Employer’s scheme trustees with written transfer instructions. See sample letter attached
- OLD MUTUAL INSURANCE
Old Mutual is a reputable insurance company. It has a long history of providing the best retirement plans, attractive unit trusts and high interest money market fund products.
Personal Pension Plan is one of the many good things Old Mutual is best known for. The plan attract the following features.
Old Mutual Personal Pension Plan
OLD MUTUAL PERSONAL PENSION PLAN is a retirement benefits scheme that allows individuals to save regularly to build up their retirement income. Personal Pension Plans (PPP), also commonly known as IPP, are normally used by self-employed individuals and those on fixed-term employment contracts to build their retirement income.
Whilst individuals look forward to retirement from formal employment, most of them are neither saving enough nor starting to save early enough to fund the lifestyle they desire in retirement. OLD MUTUAL PERSONAL PENSION PLAN can also be used by employees who are already members of an occupational scheme (employer-owned schemes) to augment their retirement savings.
OLD MUTUAL PERSONAL PENSION PLAN can also be used by individuals who change jobs, and are looking to park their past employment pension contributions whilst they join their new employer’s retirement scheme.
Investment Requirements
This is a defined contribution scheme and individuals who want to join need to meet the following requirements:
- The individual must be between the ages of 18 years and 74 years at entry into the scheme.
- The individual must contribute a minimum of KES 6,000 p.a. (KES 500 p.m.) or a minimum of KES 25,000 on transfer from another scheme.
- The individual will be responsible for all arising tax liabilities (if any) whilst contributing towards the scheme. Contributions to a pension scheme are tax deductible up to specified limits.
Key Benefits
The key benefits that members of the OLD MUTUAL PERSONAL PENSION PLAN will enjoy are:
- Tax efficient remuneration – Contributions to the scheme will be tax-free up to certain limits (currently the lower of 30% of salary or KES 20 000 per month).
- Transparency – The scheme will ensure all fees payable to service providers are communicated and traceable.
- Greater Flexibility – Members can vary their contributions subject to a 30-day notice period.
- ALEXANDER FORBES
Retirement seems like it is a lifetime away. Saving for your retirement hardly seems like a priority, especially when you have other day to day financial pressures and commitments. However just like education, marriage, career and children, retirement is just as important a financial goal as any other. It is necessary to plan in order to achieve the desired result of a comfortable retirement; and we have the right solutions to assist you reach these goals.
Alexander Forbes offers you an opportunity to secure your retirement through the VUNA personal pension plan. The Vuna Pension Plan is a retirement benefits plan that is designed to assist individuals and groups to build up retirement capital in a tax efficient way, in order to provide you with an income during your retirement.
Benefits that you can access by participating in the Vuna Pension Plan include:
- Flexible contributions
- Optimal investment returns
- Retirement Benefits
- Withdrawal and Death Benefits
- Ill health and incapacity benefits
- Built in life assurance at very competitive rates
If you are
- Self employed
- An entrepreneur
- In contractual or seasonal employment
- Are working overseas
- Working in an organization without a retirement plan
- Have a small to medium sized business
- Or already saving through a company-related plan but want to boost your retirement savings
Vuna pension plan is perfect for you.
- ICEA LION
ICEA Lion offers Personal Retirement Scheme (PRS) which benefits individuals after attaining retirement age.
ICEA LION is among few trusted insurance companies in the country and has offer 10 types of insurance products.
- APA INSURANCE
Retirement Benefits
APA Life has various solutions to assist you to plan for your retirement. The insurance company’s retirement benefit plans strengthen your financial security after retirement.
The company’s solutions provide for living expenses and financial security for dependants in the event of your absence.
In addition to all these benefits, you will enjoy tax relief on your contributions and withdrawals.
Types of Retirement Benefit Schemes
