In a significant event for the financial and business sectors, Britam Asset Managers unveiled the Ngao Umbrella Pension Scheme. This innovative pension solution, aimed at pooling retirement investments for multiple employers, promises to reduce costs per member and enhance benefits for both employers and employees.
Representing MSEA CEO Mr. Henry Rithaa at the event, Eng. Edward Karani emphasized the importance of the Ngao Umbrella Pension Scheme, particularly for the informal sector. He noted that many micro, small, and medium-sized enterprises (MSMEs) often overlook retirement planning. The Ngao Umbrella Pension Scheme seeks to address this gap by encouraging a culture of saving among entrepreneurs. This initiative aims to pool the retirement investments of multiple employers, which helps reduce the average cost per member and enhances overall returns and benefits for both employers and employees.
Eng. Karani highlighted the significant role MSMEs play in the economy, contributing 33.8% of the national output. He also spoke about various partnerships that the Authority has established to empower the MSME sector. One such partnership is the upcoming NYOTA project in collaboration with the World Bank, designed to increase employment, earnings, and promote savings among vulnerable youth. Through Component 3 of this project, the Haba Haba Scheme will provide saving opportunities to 190,000 Kenyans.
He expressed the Authority’s openness to public-private partnerships and looked forward to further collaboration with Britam. He praised Britam’s efforts to support the MSME sector by offering accessible and inclusive pension schemes.
Eng. Edward Karani, MSEA Director of Infrastructure Development, Technology, and Innovation giving his remarks during the launch.
Why Pension Schemes Are Essential
Pension schemes are crucial for everyone, whether in the formal or informal sector. They provide financial security in retirement, ensuring individuals can maintain their standard of living even after they stop working. Employees benefit from regular income post-retirement by contributing to a pension scheme, while employers gain a motivated and stable workforce.
Key Features of the Ngao Umbrella Pension Scheme
The Ngao Umbrella Pension Scheme offers several notable features:
- Fully Registered: The fund is fully registered with the Retirement Benefits Authority and Kenya Revenue Authority.
- Approved for NSSF Tier II Contributions: It is approved to accept and invest the NSSF Tier II contributions.
- Two Options:
- Pension Scheme: One-third of the accumulated benefit is paid as a lump sum, and the remaining two-thirds provide regular income for life upon retirement or can be withdrawn over a minimum of 10 years.
- Provident Fund: The accumulated fund amount is paid to the retiring employee in a single lump sum.
Moments captured during the launch
Benefits for Employees
Employees participating in the Ngao Umbrella Pension Scheme enjoy several benefits:
- Tax Deductible Contributions: Contributions are tax-deductible for both employer and employee, subject to limits set by the Kenya Revenue Authority.
- High Investment Income: Contributions are prudently invested to ensure high returns with a guaranteed minimum rate of 5% per annum compounded.
- Market Volatility Protection: The accumulated capital is guaranteed against market volatility, securing the employees’ retirement fund.
- Portability of Benefits: Employees can transfer accumulated benefits to any other registered retirement scheme if they change employment.
- Flexibility: Employers can choose the type of fund, contribution rate, and retirement age.
- Pension-Backed Mortgage: Members can assign up to 60% of the accumulated fund towards financing the purchase or construction of a house.
- Death Benefits: In the event of death before retirement age, the total accumulated fund is payable to the employee’s appointed beneficiaries.
Benefits for Employers
The Ngao Umbrella Pension Scheme also offers advantages for employers:
- Attract and Retain Qualified Staff: Ability to attract and maintain qualified staff.
- Motivated and Productive Staff: Enhances staff motivation and productivity.
- Tax Savings: Save money through tax-exempt employer contributions.
- Brand Value Enhancement: Enhance the organization’s brand value.
- Legal Compliance: Compliance with legal requirements on employee retirement benefits.
For further inquiries, contact any of Britam’s financial advisors on their toll-free line (0800-221-8000) or visit any of their branches across the country.
