Britam asset managers are now targeting Small and Medium Enterprises and the wider informal sector with a new pension scheme, which seeks to secure retirement benefits for the groups.

Dubbed “Britam Ngao Umbrella Pension Scheme", the plan also gives salaried individuals an option to re-direct their Tier 2 NSSF contributions, which applies to pensionable earnings above Sh7,000, up to Sh36,000.

The multi-employer retirement benefit scheme by Britam Asset Managers Kenya Limited pools funds from various employers, invests and manages these funds collectively to ensure its members benefit from retirement savings.

According to Britam, businesses can bypass the complex and often costly process of registering a stand-alone retirement benefits scheme.

This is particularly advantageous for Small and Medium Enterprises (SMEs), which may find the registration requirements daunting, it said on Wednesday.

The scheme is designed to offer cash lumpsum benefits to members upon their retirement.

It is also registered under the Retirement Benefits Authority (RBA) and with the Kenya Revenue Authority (KRA) for tax exemption.

It also complies with NSSF Tier 2 Contributions, further easing the compliance burden for participating employers.

Following a Court of Appeal ruling on February 3, 2023, the NSSF Act 2013 was declared constitutional, prompting immediate compliance by all employers in Kenya.

The Act mandates that employers and employees each contribute six per cent of the employee’s earnings, making a total contribution of 12 per cent.

These contributions are divided into three tiers. Tier 1 contributions are mandatory payments to the NSSF, while Tier 2 contributions can be redirected to other schemes, such as the Britam Ngao Umbrella Pension Scheme, under a contracting-out arrangement.

Tier 3 contributions, which apply to earnings above the upper earnings limit, are also directed to registered schemes.

Speaking during the launch in Nairobi, Britam Asset Manager’s CEO Barack Obatsa said the Britam Ngao Umbrella Pension Scheme is designed to support businesses in their growth journey, by taking on the complex aspects of retirement planning, allowing them to focus on their core operations.

"Our aim is to ensure that every employee in Kenya has access to a secure, cost-effective retirement plan, and this scheme is a significant step towards achieving that goal,” Obatsa said. 

“By signing up to this scheme, SMEs will not only enhance staff loyalty and retention, but will also provide a competitive package that attracts new talent.”

Employers are also relieved of the fiduciary responsibilities typically associated with managing a retirement scheme, allowing them to focus on their core business activities.

The scheme is compliant with NSSF Tier 2 contributions, adding another layer of compliance and benefit for employees.

Employers must however pass a resolution to contract out Tier 2 contributions, notifying employees of the intention to contract out, and completing the necessary forms for approval by the Retirement Benefits Authority (RBA).

Once approved, employers can start remitting their Tier 2 contributions to the Britam Ngao Umbrella Pension Scheme, ensuring compliance with the statutory requirements.

The Scheme is ideal for any registered entity with at least one employee, according to Britam,  smaller schemes seeking to avoid the operational complexities of running a stand-alone scheme, and employers looking to enjoy the benefits of pooling resources.

"The Scheme is managed by a team of highly professional service providers, further enhancing its appeal to Kenyan businesses seeking reliable and efficient retirement benefits solutions," the firm said.