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Mr. Nzomo Mutuku, Chief Executive Officer of the Retirement Benefits Authority (RBA) responds to queries by members of the public

1.                  Taxation of pension funds has remained a big burden to majority of Kenyans going into retirement. While the RBA has been coming with various regulations to safeguard the retirees’ benefits, the issue of taxation appears to be given a back seat. When still in the active employment Kenyans are heavily taxed and since pension funds play a vital role in the economic growth there is no logical reason why savings for the old age should again be subjected to taxation at the tail end of one's working life. The current tax brackets exemptions are still low and the 65 years of tax-free for pensioners is in most cases unattainable. What is RBA doing to lessen this burden on the pensioners? Seth Lumidi Mwangani, Certified Public Trustee, Nairobi


The Government has provided various Tax incentives to pension savings including tax exemption on contributions upto 25,000.00 per month, tax free investment income, wider tax bands (lower rates) on benefits and tax free pension at age 65 and above.  There, however remains need for additional incentives, in order to encourage more Kenyans to save for retirement and grow those savings. The Authority has continuously engaged and lobbied for the enhancement of the existing tax regime in the pension industry. Indeed, we recently proposed a number of amendments to the Income Tax Act as part of the ongoing review.



2.                  The Retirement Benefits Act stipulates that all RBA determinations must be signed by the CEO who is the final authority. Indeed there are precedents where determinations that were signed by junior officers were successfully appealed at the RBA Tribunal and returned to the RBA for further consideration for example the ruling of April 23, 2012 by the Retirement Appeals Tribunal in the Civil Appeal No 8 of 2011, Alice Mumo & Others Vs 1) RBA and 2) Co-op Bank Staff Retirement Benefits Scheme. As the RBA CEO, what are you doing to reign in rogue officers who continue to flout this provision of the RBA Act with impunity by issuing and signing skewed opinions under the guise of determinations - usually favourable to the Pension Schemes - while denying due process to retirees whose interests they are employed to safeguard? James Kamunde, Nairobi


It is true there was one case in the past where a direction was inadvertently signed by a senior officer.  This was noted and corrected. The Authority is now fully complying with the legal requirement that directions are only issued by the CEO.


3.                  There have been instances when retirees have faced delays in receiving their dues upon retirement, especially from the Director of Pensions at the National Treasury. Is there a time limit within which a person should receive his/her dues after lodging the claim? What is your office doing to deal with the delayed processing of claims? Francis Njuguna, Kibichoi


The Authority is concerned, and will seek to intervene where possible, where payment of benefits is delayed.  Under the Retirement Benefits Act benefits must be paid within a maximum of 30 days of retirement. However, this specific question touching on Civil Service pensions has been forwarded to the Pensions Secretary/Director for his attention, as the Civil Service Pension Scheme is not within the Authority’s mandate as provided in Section 32(1) of the Retirement Benefits Act.


4.                  What in your view are the reasons for the persistent call from some quarters to privatise NSSF as opposed to government managing it yet the money NSSF manages is for individual contributors, not the government? Derek Liech, Mombasa County


The NSSF is a Tri-Partite scheme where Employers and Employees contribute and the government offers a legal framework to ensure that the Kenyan worker retires with an adequate retirement income.


The persistent calls have been addressed through reforms, which have streamlined the operations of the fund, including;


1.      The investment of the scheme funds has now been outsourced to professional managers licenced by the RBA thereby ensuring higher returns to members.

2.      A new legal framework, the NSSF Act, 2013, currently contested in court, was enacted to improve the governance structure of the fund. The Law also allows members to make a portion (tier two) of their contributions to an alternative scheme of their choice.  Once the new Law becomes fully operational the challenges of the past will have been reduced.



5.                  Can a contributing member of NSSF transfer his contribution to his or her new employer who has a private pension scheme? Derek Liech, Mombasa County


No, the NSSF is a mandatory national scheme. The law establishing the NSSF Scheme requires it to be mandatory to all Kenyans hence one is not allowed to transfer or access his or her benefits until he or she attains the retirement age.


However, as mentioned in a previous response (above) a new legal framework, the NSSF Act, 2013, currently contested in court, was enacted to improve the governance structure of the fund. The new Law also allows members to direct a portion (tier two) of their contributions to another scheme of their choice.




6.                  As RBA, do you have any working relations with the Unclaimed Financial Assets Authority (UFAA)?  Josiah Mwamburi, Kilifi


Yes, the Retirement Benefits Authority has a Memorandum of Understanding (MOU) with the Unclaimed Financial Assets Authority (UFAA) to deal with unclaimed assets in the retirement benefits sector. Pension scheme trustees are expected to surrender all the abandoned benefits within the timeframes specifies under the UFAA Act.  The Authority has also surrendered unclaimed retirement benefits assets it previously held under the RBA Trust Fund to UFAA following the enactment of the UFAA Act.



7.                  Many companies have been retrenching staff in recent times. In such a case as retrenchment, do the regulations allow whoever has been forced off a job to access his pension without any encumbrances? Githuku Mungai, Nairobi


Yes, the Retirement Benefits Regulations accords a scheme member various options once he or she exits employment due to whichever reason, including retrenchment. A member can defer the benefits until he or she reaches retirement age, he or she can transfer to another registered scheme or partially access the benefits depending on his or her age at the point of exit. For example, in a defined contribution scheme, if a member is below 50 years, he or she will be allowed to access 100 per cent of his own contribution and 50 per cent of his employer’s contribution and the investment income that has accrued in respect of those contributions.


8.                  I believe part of your mandate is to see that many Kenyans embrace securing their old age through savings. It is an open secret that many youths are unemployed and engage in part-time jobs as they look forward to securing 'Permanent and Pensionable' jobs. This however may not come to pass. How can these young people be encouraged to join private pension schemes through little contributions to secure their futures? Komen Moris, Eldoret


Information is power. People, whether employed or not, need to understand that they can join Individual Pension Schemes that have been licensed by RBA. We have 35 Individual Pension Plans (IPPs) that cater for the vast interests of the informal sector. In the last two months, the RBA has been carrying out radio campaigns across vernacular and religious FM stations on the need to join pension schemes. Through working with other partners, financial literacy has now been inculcated in our school curriculum. In the long term, this shall see many Kenyans embrace saving for retirement. To increase coverage to the informal sector workers, we partner with stakeholders including County Governments and sector associations to undertake outreach programmes to informal sector workers and employers (proprietors) on the importance of establishing retirement savings arrangements. The Authority also promotes research to identify viable options for extending retirement benefits coverage to the self-employed in consultation with key stakeholders.



9.                  I have observed that in the recent past, most pension schemes, more so those associated with Universities have high affinity for the so-called 'Pension Towers' using members' pension contributions. As a regulator, do you approve such capital investments? Are there any risks associated with this to the members and how do you safeguard interest of members whose funds are used to up these high rise buildings? Komen Moris, Eldoret


The Investment guidelines under the Retirement Benefits Act provide for the manner of investment of scheme funds.  In the case of property, schemes are allowed to invest upto 30 percent of their assets in this category.  In addition, all schemes must have an Investment Policy Statement (IPS) approved by the Authority and any proposed investment must be provided for in the IPS. Further, all schemes are required to appoint a fund manager registered by the Authority to undertake the actual investments. The Authority, therefore, does not approve  specific investment but schemes are required to  submit an investment report to the Authority every quarter to enable us monitor compliance. To reduce liquidity risk arising from direct property investments by schemes the investment guidelines were recently amended to enable schemes invest in property through Real Estate Investment Trusts (REITS).



10.              What is the impact, if any, of application of International Financial Reporting Standard (IFRS) 9 on accounting for retirement benefit funds in Kenya? Upin Vasani, Nairobi


IFRS 9 specifies how an entity should classify and measure financial assets and financial liabilities. Retirement benefits funds in Kenya will primarily be impacted through their investments in Banks and Insurance Companies which will now have to reclassify assets in line with the standard which will impact on their capital and profitability.


11.              Sir why do retirees who have faithfully served this nation in various capacities and who follow the correct procedure have to be kept waiting for a minimum two years before they can get their pension? Why do we have to corrupt our ways even to get what is due to us as retirees? Joseph Patroba Malenya (ID No.4392672) Bungoma East Sub County, Bungoma


The Authority always seeks to intervene, where possible, in investigating delayed benefits and having them paid usually with the required interest for the period of the delay.  Mr. Malenya is encouraged to write to the Authority with details of his specific case for determination.  However, as stated above, any cases touching on Civil Service pensions are handled by the Pensions Secretary/Director of Pensions


12.              From a point of information, retiring from government service is like a curse when it comes to accessing benefits: Staff of parent ministries demand bribes to clear files and the corruption networks spread all the way to the Treasury for final clearance. What are you doing about it? Mwangi Lincoln, Murang'a County


This refers to Civil Service Pension. Mr. Mwangi is encourage to forwarded it to the Pensions Secretary/Director for attention, as it is not within the Authority’s mandate as provided in Section 32(1) of the Retirement Benefits Act.


13.              Do you feel there is a need for a legislation that is forward moving where there is a precise time frame between date of retiring and date of receiving a retiree's full benefits? Mwangi Lincoln, Murang'a County

Currently, Regulation 7 (00) of the Retirement Benefits (Occupational Retirement Regulations) requires every scheme to have rules which provide for the period upon which a member may withdraw his benefits from the scheme upon retirement provided that such period shall not exceed thirty days from the date of retirement or of giving notice of such withdrawal, as the case may be. The Authority, in collaboration with trustees and administrators, continually sensitizes members of schemes about such provisions and encourages them to read and understand their scheme’s trust deed and rules, or legislation where applicable, since they vary from scheme to scheme.


14.              Majority of the pension schemes are well monied and often have some political influencers behind them. How does RBA, with just Exchequer funding, manage these firms to ensure they toe the line? What punitive measures does the law give RBA to deal with errant members? Edith Wanja, Thika


The Authority regulates and supervises all pension schemes and the service providers in the pension industry in accordance with the Retirement Benefits Act and other enabling laws. All these entities are subjected to equal treatment of the law irrespective of their financial muscle. Any pension scheme or service provider that violates any provision of the Retirement Benefits Act shall either be subjected to inspection, interim administration or deregistration. The Authority further collects levy from pension schemes, which adds up to the funding of its operations.


15.              A keen look at pension funds in the country reveals a worrying trend where most if not all prefer to put all their money in government bills and bonds. What makes government bills and bonds so attractive to the pension funds? Aren’t there other avenues of investing the monies which could equally give favourable returns to the firms and the contributors? Mbuthia waMwangi, Nairobi

Sustainability and adequacy of retirement benefit funds, particularly for defined contribution schemes, largely depends on prudent investment. This has been supported by issuance and regular review of investment guidelines from time to time. The investment guidelines provide for 14 different categories of assets in which schemes can invest in of which government bonds and bills is one.  Schemes are expected to diversify their investments amongst different allowable asset classes. However, due to the lack of depth in the markets for some of these assets, pension schemes tend to invest in only a few asset categories including government bonds and bills, as they are readily available and offer good secure returns. Nevertheless, total pension scheme investment in government securities as at December 2017 amounted to Kshs 394.2 billion which is only 36.5 percent of the total pension assets of Kshs 1,080.0 billion.



16.              What contribution is the Retirement Benefits Authority making to the realisation of the Jubilee administration’s Big Four Agenda? Winfrida Wanjala, Nakuru


On affordable housing, pension schemes have already invested Kshs 226.7 billion in property investments including a number of housing projects. The Authority is supporting the government’s plan to issue a housing bond that will be used to finance affordable housing programme and which pensions schemes are looking forward to investing in.  The Authority is also part of the team structuring the Kenya Mortgage Refinance Company (KMRFC)  which will issue bonds that the pensions schemes can invest in to provide funds for on-lending to Kenyans for mortgages.. The Authority is also supporting the pursuit of the universal health care goal. It has allowed pension schemes to provide for a post-retirement medical fund into which members can contribute, but also provide for access to retirement savings for their members with little time to contribute towards the same, for the purpose of buying into a medical scheme to provide for their health care in retirement. In support of manufacturing, pension funds are invested in a number of capital markets and private equity products that fund manufacturing concerns and grow them.


17.  Sir, majority of the informal workers in the country do not have any cover for old age. In fact, most of them are sole proprietors and efforts to organise them to groups has often not been easy. What measures does RBA have to ensure this group of workers also benefit from retirement plans? Paul Omuga, Ahero

The Authority encourages all formal and informal sector workers to be registered and to contribute under the mandatory retirement benefit scheme including encouraging workers in the diaspora. Currently, all employees are supposed to contribute to National Social Security Fund. This category of workers includes domestic workers and workers in all sectors of our economy. Informal sector workers an also join one of the 35 Individual Pension Plans (IPPs) registered by the Authority which are open to everyone to join. To increase coverage to the informal sector workers, we partner with stakeholders including County Governments and sector associations to undertake outreach programmes to workers and employers (proprietors) in the sector on the importance of establishing retirement savings arrangements. The Authority also promotes research to identify viable options for extending retirement benefits coverage to the self-employed in consultation with key stakeholders. To obtain information on how to save for retirement informal sector workers can simply call our toll free number: 0800720300 or just dial *870#.

18.              First, I am aware of the proposed merger of (RBA, CMA, IRA & SASRA) to create Financial Services Authority. In this regard, how will the activities of RBA be affected by the supposed merger? What steps has the Authority taken in sensitizing the stakeholders of the merger and the conduct of business after the merger? Kaumbuthu M. Josphat Miomponi, Tharaka-Nithi County


The proposed Financial Services Authority (FSA) Bill is still at the draft stage. Stakeholder consultations and sensitisation will be undertaken if the Government decides to progress the Bill.


19.              You have relayed crucial information targeting all sectors and it is imperative to note that the MBAO Pension scheme is a good example. How are these being managed effectively to secure the members contributions and guarantee the intended purpose? Kaumbuthu M. Josphat Miomponi, Tharaka-Nithi County


The MBAO pension scheme is a scheme categorized as an individual retirement benefit scheme. An individual retirement benefit scheme or Individual Pension plan (IPP), like any other, is managed by the scheme trustees and regulated by the Authority. The set of laws and regulations relating to this particular scheme include the Retirement Benefits Act, the Retirement Benefits (Individual Retirement Benefit Scheme) Regulations, and the MBAO scheme trust deed and rules all of which are important in effective management and must be adhered to in protecting the rights and interests of the members of the scheme and ensuring compliance with the law. 



20.              I have checked on your website and discovered that you have what is called Whistle Blower Portal. I am interested to know after verification of allegations presented to you by members of the public what do you do against people who maliciously give wrong information against employers here in Kenya? Dan Murugu, Nakuru 


The cases reported to the Authority through the portal have been handled through our Complaints Management Process, which is documented and available to the public on the website.  Complaints are often resolved amicably once employers and trustees are engaged to review them.  We have therefore not had to take any action against a malicious person as indicated.


This Q&A was first published on the Daily Nation of Sunday, July 15, 2018

If you have a question for the RBA CEO, send it to This email address is being protected from spambots. You need JavaScript enabled to view it. and we shall publish responses in the next issue of the Pensioner Magazine


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