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CPF Financial Services, in partnership with the Standard Investment Bank (SIB), have launched a pension scheme to manage tier II contributions from employers who opt out of the National Social Security Fund (NSSF).
In a joint announcement on Tuesday, the firms said the scheme dubbed Taifa Pension Fund will also target Kenyan workers who do not currently have access to a pension plan.
“The Taifa Pension Fund, which is administered by CPF Financial Services and managed by Standard Investment Bank as the pioneering fund manager, is a scheme for all Kenyans from diverse working backgrounds, in both the private and public sectors,” CPF and SIB said.
“As an umbrella fund, the scheme offers a cost-effective option for employers looking to establish employee pension benefits, pooling funds from participating employers to reduce the average cost per member in the scheme administration,” the firms added.
CPF was cleared by the Retirement Benefits Authority (RBA) in April last year to be a custodian of the tier II contributions – those by workers earning above Sh18,000 – through the Taifa Fund which is designed for private and public sector employers and staff.
This followed the enactment of the 2013 NSSF Act whose implementation had begun in February of the same year, allowing employers to channel the higher contributions (tier II) to private pension schemes in a move that opened a new battlefront between NSSF and the private pension providers.
SIB, on the other hand, received its RBA nod to manage retirement benefits schemes in March this year, boosting the efforts by the investment bank to diversify its product offering as it seeks to become a leader in wealth management.
The higher contributions are categorised into two- tier I contributions which represent pensionable earnings up to the lower earning limit and Tier II- earnings between the lower earning limit and the upper earning limit.
The maximum mandatory pension contribution is currently set at Sh2,160 based on an upper earning limit of Sh18,000 while the lower earning limit is set at Sh6,000 putting the maximum tier I contribution at Sh720.
All tier I contributions must be submitted to the NSSF while employers with occupational schemes can opt out of the tier II contributions by applying to the RBA.
The RBA had cleared 84 private pension schemes to handle the tier II contributions as of June last year including CIC Life Assurance, Octagon Africa, Enwealth Financial Services, Britam, CPF Financial Services, Zimele, and Old Mutual.
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