Sharp Daily
No Result
View All Result
Tuesday, August 26, 2025
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
Sharp Daily
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
No Result
View All Result
Sharp Daily
No Result
View All Result
Home Pensions

How umbrella pension schemes work in Kenya

Christine Akinyi by Christine Akinyi
April 11, 2025
in Pensions
Reading Time: 2 mins read

Umbrella pension schemes in Kenya are retirement savings plans that pool contributions from multiple employers under a single trust. These schemes are designed to offer cost-effective pension solutions, especially for small and medium-sized enterprises (SMEs) that may not have the resources to set up their own occupational pension schemes. Regulated by the Retirement Benefits Authority (RBA), umbrella schemes help employees from different organizations save for retirement while benefiting from professional fund management and reduced administrative costs.

The structure of an umbrella scheme involves three key players: the sponsor (often an insurance company, fund manager, or administrator), participating employers, and the employees who contribute to the scheme. Each employer joins the scheme under a distinct participation agreement, ensuring that their contributions and those of their employees are accounted for separately. Despite being part of a larger pooled fund, individual members have personal accounts where contributions and investment returns are tracked. This ensures transparency and fairness in benefit allocation.

One of the main advantages of umbrella schemes is cost efficiency. By pooling funds from multiple employers, these schemes benefit from economies of scale, reducing investment and administration costs per member. Employers also avoid the regulatory and administrative burdens associated with managing standalone occupational schemes, as the umbrella scheme sponsor handles compliance, governance, and reporting requirements. This makes umbrella schemes an attractive option for companies looking to provide retirement benefits without incurring significant overhead costs.

Contributions to an umbrella scheme typically follow the same structure as other pension schemes. Both the employer and the employee make monthly contributions, often set as a percentage of the employee’s gross salary. The funds are then invested in a diversified portfolio, which may include government securities, equities, and fixed-income instruments. Over time, these investments generate returns, growing the members’ retirement savings. Members have the flexibility to track their savings and switch investment portfolios, depending on the scheme’s options.

RELATEDPOSTS

Segregated Pension Schemes in Kenya Q2’2025 Performance

August 8, 2025

Boost employee retention and save on costs with CURBS

May 21, 2025

Upon retirement, members can access their benefits either as a lump sum, through an income drawdown plan, or by purchasing an annuity to provide lifelong income. If an employee leaves their employer before retirement, they have the option to transfer their accumulated benefits to another registered pension scheme or retain them within the umbrella scheme until retirement. This portability feature enhances the attractiveness of umbrella schemes, particularly in a job market where employees frequently change employers.

Umbrella schemes play a crucial role in increasing pension coverage in Kenya, especially among SMEs. By offering a cost-effective, professionally managed, and flexible retirement savings solution, they help more workers secure financial stability in retirement. As more employers recognize the value of these schemes, umbrella pensions are expected to continue growing, contributing to broader financial inclusion in Kenya’s retirement benefits sector.

Previous Post

Sleep easy knowing CMMF is growing your money daily

Next Post

The new rules of wealth: Lessons from Millennials and Gen Z

Christine Akinyi

Christine Akinyi

Related Posts

Pensions

Why Young Kenyans Cannot Afford to Ignore Private Pensions

August 22, 2025
Pensions

Understanding NSSF and the Two-Tier Contribution System

August 22, 2025
Pensions

Consolidating Pension Contributions in Kenya

August 15, 2025
Asset allocation dividing an investment portfolio among different asset categories.
Pensions

Building a Retirement Portfolio in Kenya

August 8, 2025
1049795356
Analysis

Maximizing Your Pension Contributions

August 1, 2025
Pensions

Why young professionals should care about pensions

July 23, 2025

LATEST STORIES

Finding Balance: My Journey with Internet Self-Care

August 22, 2025

Why Young Kenyans Cannot Afford to Ignore Private Pensions

August 22, 2025

Strategies for Nairobi to emerge as Africa’s financial hub

August 22, 2025

Understanding NSSF and the Two-Tier Contribution System

August 22, 2025

Kick financial goals: Invest with CMMF this football season

August 22, 2025

AI and the future of investment research

August 22, 2025

Why private credit gaining traction in emerging markets

August 21, 2025

Liberty Kenya Holdings H1’2025 profit declines by 29.8%

August 21, 2025
  • About Us
  • Meet The Team
  • Careers
  • Privacy Policy
  • Terms and Conditions
Email us: editor@thesharpdaily.com

Sharp Daily © 2024

No Result
View All Result
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team

Sharp Daily © 2024