FAQs

MEMBERSHIP

Who can join?

The DB Scheme was closed to new members effective 31 December 2011.  This means that it does not allow new members to join the DB Scheme after the Closure Date.

Is membership compulsory?

Yes but only for eligible employees who joined the Employer before 31 December 2011 and opted to remain a member of the DB Scheme. After 31 December 2011, new employees are not allowed to join the DB Scheme. New employees effective 1 January 2012 are required to join the DC Scheme.

Am I also a member of the NSSF?

Your membership of the National Social Security Fund (NSSF) is in no way affected by being a member of the DB Scheme.  You and the Employer will still be required to pay the statutory contributions to the NSSF, but you will be entitled to all the benefits provided under this Scheme.

CONTRIBUTION

The Contributing Member and Employer shall contribute to the DB Scheme. There are no contributions made in to the DB Scheme by or in respect of the members who joined the DC Scheme. Such members will make contributions in the DC Scheme.

How much do I contribute to the Scheme?

As a Contributing Member, you will be required to contribute at 10% of your Pensionable Emoluments. The contributions will be deducted from your salary in monthly installments and will be credited to your Member Account.

How much does the Employer contribute to the Scheme?

The Employer contributes to the Scheme in respect of each Member at 20% of their Pensionable Emoluments. The Employer may make additional contributions to meet the balance of the cost of the retirement and other benefits provided under the DB Scheme.

How do I obtain tax relief?

Your contributions are deducted from your salary before tax is calculated, which means that full tax relief is granted without the need to claim it.  However, there are Income Tax limits on the extent to which tax relief is available on your contributions to the Scheme and you will be advised of these limits as they change from time to time.

Can I pay more for higher benefits?

These payments are known as Additional Voluntary Contributions (AVCs) and are a tax efficient way of providing extra retirement income. You can start paying AVCs on joining the Scheme or at any other time. 

There are however legislative restrictions on the maximum that you can pay as AVC which you will be advised if affected.

Vesting of Benefits

All benefits derived from contributions made by a Member vests immediately in that Member whereas benefits derived from contributions from the Employer vests fully to the Member after a maximum of one year of service with the Employer from the date of confirmation of his employment.

RETIREMENT BENEFITS

When can I retire?

The Normal Retirement Age for the Scheme is age 60.  However, provided that the Employer agrees, you may retire at any time after the age of 50, or earlier if you are in ill health.  Also, if the Employer agrees, you may continue working after your Normal Retirement Age.

What is my benefit at retirement?

At retirement, your benefit shall be in the form of a pension paid by the DB Scheme. A pension, also known as annuity, is the term commonly used to describe the regular payments a person receives for life after retirement.

How much will be my pension be at retirement?

An annual pension of 3% of Final Pensionable Emoluments for each year of Pensionable Service completed prior to 1 January 2000 and 2% of Final Pensionable Emoluments for each year of Pensionable Service completed after 1 January 2000.

Can I take part of my benefit in the form of a cash lump sum?

You may take up to a maximum of one-third of your pension benefit as a cash lump sum at retirement.  The current legislation restricts the amount that may be taken as a cash lump sum to no more than one-third of the cash equivalent of the pension if you are a member who had made contributions to the Scheme. The balance of two-third must be taken as an annual pension.

What if I retire early?

You may, with your Employer’s consent, retire with a pension from any age after reaching age 50, or earlier if you are in ill health.  However, the legislation will not permit you to draw your pension while you are working for your Employer.

The benefits you will receive will be calculated using the formula, but shall be reduced to take account of early payment on a basis agreed by the Trustees on the advice of an Actuary.

Can I continue working beyond Normal Retirement Age?

If, your Employer agrees, you may continue working after the Normal Retirement Age. 

On late retirement the benefit payable shall receive an enhanced pension based on the amount of pension you would have received had you retired at your Normal Retirement Date. The enhancement shall have regard to the period of time between the attainment of the Normal Retirement Age and -your actual date of retirement.

What if I retire early as a result of ill-health?

You may with the consent of the Employer retire early as a result of ill health.  On Ill-health Retirement the benefits payable will be calculated in the same way as Early Retirement but with no reduction for early payment.

Will my pension increase after retirement?

The Trustees shall review the level of pensions in payment and subject to the assent of the Employer may award that each pension be increased. The pension for the past service accrued under the KPLC Scheme (before 1 January 2000) is reviewed annually at the rate of 3%. 

LEAVING THE SERVICE BENEFITS

Less than one (1) year of Pensionable Service 

If you leave the service of your Employer for any reason before Retirement Age and have served less than one (1) year of Pensionable Service, you will be entitled to receive your own contribution plus interest. The Employer’s portion will be forfeited. On leaving service, you will have the following options to access your benefits:-

  • To retain your benefit in the DB Scheme until retirement age; or
  • To transfer your benefit from the DB Scheme to another pension arrangement; or
  • To take the benefit from the DB Scheme as a lump sum.

More than one (1) year of Pensionable Service

If you leave the service of the Employer for any reason before  Early Retirement Age of 50 years and have completed more than one year (1) of Pensionable Service, you will be entitled to receive the accrued benefit determined as the higher of:-

  • The actuarial cash equivalent of your deferred pension. The deferred pension is calculated based on the formula shown under retirement; and
  • Your own accumulated contributions together with a designated portion of the Employer’s accumulated contributions plus interest.

On leaving service, you will have one of the following options to access your benefits:-

  • Take 50% of the accrued benefit as a lump sum. The balance of 50% would be retained in the DB Scheme or transferred to another pension arrangement,  and payable at retirement age;
  • To transfer your benefit from the DB Scheme to another pension arrangement; or
  • To retain your benefit in the DB Scheme until retirement age.

If you have a deferred (or retained) benefit in the DB Scheme and have attained the age of fifty (50) years or more, you may request the Trustees to pay the retained benefit as a retirement benefit i.e. a maximum of one-third (1/3rd) of the benefit would be paid as a cash lump sum and balance of the benefit (2/3rd ) will be paid as a regular pension. This pension would be reduced for early payment if paid before the Normal Retirement Age of 60 years.

What if I am emigrating?

If you are permanently emigrating from Kenya to another country with no present intention of returning you may access your entire benefit as a cash lump sum with the consent of the Scheme Trustees and approval of the Retirement Benefit Authority.

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