This article discusses the various types of pension plans available in Kenya for use by citizens of diverse groups. A pension plan is a type of investment in which both employers and employees contribute funds to a pool of funds in exchange for defined benefits upon retirement.
After retirement, the majority of people live unhappy lives. This is the result of failing to plan for the future. Investing in a pension plan is the most certain way to live a decent life after retirement. Anyone who earns a living can join a pension plan or scheme.
Types of Pension Plans in Kenya
1. Individual Pension Plan
It is a type of pension plan established by an individual to make contributions toward retirement savings. It is an excellent pension plan for those who work in the informal sector. This is due to the availability of flexible savings plans for those working in the informal sector or on their own.
2. Occupational Pension Scheme
An employer creates the plan and pays into it on behalf of the employees in order to provide retirement benefits. Both the Kenya Revenue Authority and the Retirement Benefits Authority have registered it.
Employees covered by this plan will receive their money upon retirement when they leave their jobs or are fired, when they become unable to work due to illnesses or other problems, or when they relocate abroad.
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You can only take a full withdrawal from this plan after reaching retirement age. Beneficiaries or the next of kin are entitled to complete access to the funds in the event of a death or medical emergency.
3. Umbrella Scheme
It is a kind of pension plan that enables participation in a single pension plan by numerous, unrelated employers. The plan is cost-efficient and has no physical requirements. This explains why it is well-liked by the majority of the nation’s organizations. Because it pools the retirement investments of several employers, the program improves the overall benefits and returns to both employers and employees.
4. Public Service Superannuation Scheme
This is a defined contribution plan where retirement benefits are funded by contributions from both the government and the workforce. The plan is intended for government employees. In accordance with the Retirement Benefits Act, the program is governed.
