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occupational pension scheme

Setting Up An Occupational Pension Scheme in Kenya

occupational pension scheme

Setting Up An Occupational Pension Scheme in Kenya

Considering that it is not mandatory in Kenya for employers to have an occupational pension scheme, setting up one within your organization may be just what you need to differentiate you from your competitors. 

One of the things that employees seek from their places of work is to be valued, and investing in their futures is a sure way of doing so. With an occupational pension plan in place, employees will not only be motivated to improve their performance, to maximize the benefits offered but are also more likely to remain loyal to the company for longer periods.

Although at face value it may appear as a costly move, a pension plan is highly beneficial in the long run. Among other benefits, a solid pension plan simplifies the task of headhunting for the top talent by making you highly attractive to the workforce.

In this article, we focus on how you can go about setting up a pension plan for your organization. 

Factors to Consider when Setting Up an Occupational Pension Scheme

There are three factors to consider as you go about setting up your plan: 

  • The type of plan 
  • The legal aspect 
  • Communication with employees

Type of Plan

The type of occupational plan you choose depends on your organization’s individual needs and circumstances, for example, the size, the benefits you want to offer, incentives and, the number of employees.

Umbrella Plan

This is a plan that pools together contributions from multiple, unrelated employers and is already registered by the Retirement Benefits Authority (RBA). This is convenient for small-to-medium-sized businesses whose budgets may be limited. 

Before setting this up within their organization, employers are required to sign a deed of Adherence binding them to the rules of the scheme.

Stand-Alone Plan

In this plan, the employer is seen as the founder, is required to register it with RBA, and must appoint the following service providers who will run and maintain it: 

  • Trustees: Ensure that the scheme complies with the governing law
  • Administrator: Manages the administrative affairs of the scheme
  • Fund manager: Implements investment policies established by trustees 
  • Custodians: Hold all assets of the scheme

The cost of setting up a stand-alone plan as well as the amount of administrative work needed, causes employers to lean more towards the umbrella plan

Legal Aspect

Regardless of the pension plan chosen, an employer is obligated to comply with the legislation of the pension system and the rules of the scheme. Failure to comply will result in enforcement actions and fines.

Communication with Employees

Clear communication is fundamental in any good work environment. Employees need to be informed about the existence of the plan, who they can contact with queries,  benefits offered, as well as the eligibility of joining the scheme.

Conclusion

Setting up an occupational pension scheme is one way of differentiating your organization. Although the decision depends on your organizational circumstances, there is the freedom to switch between plans.

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