Sharp Daily
No Result
View All Result
Friday, August 8, 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 Investments

How umbrella pension schemes work in Kenya

Christine Akinyi by Christine Akinyi
February 21, 2025
in Investments, Money, Pensions
Reading Time: 2 mins read
Economic recession and recovery concept and return on investment roi idea

Economic recession and recovery concept and return on investment roi idea

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

Holistic retirement planning with CURBS and CPRBS

May 28, 2025

Retirement planning for non-salaried workers with CPRBS

May 14, 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

Opinion: Technocrats or political appointees ?

Next Post

Power struggle erupts over UoN chancellor’s overhaul plan

Christine Akinyi

Christine Akinyi

Related Posts

Asset allocation dividing an investment portfolio among different asset categories.
Pensions

Building a Retirement Portfolio in Kenya

August 8, 2025
Analysis

The hidden cost of outdated economic statistics

August 7, 2025
1049795356
Analysis

Maximizing Your Pension Contributions

August 1, 2025
Analysis

Kenya’s Interest Rate Cut: A Turning Point for Growth

July 31, 2025
Pensions

Why young professionals should care about pensions

July 23, 2025
Analysis

Transferring Your Retirement Benefits Between Pension Schemes in Kenya

July 23, 2025

LATEST STORIES

Segregated Pension Schemes in Kenya Q2’2025 Performance

August 8, 2025
Asset allocation dividing an investment portfolio among different asset categories.

Building a Retirement Portfolio in Kenya

August 8, 2025

Steps banks can take to align with fair lending practices

August 7, 2025

The hidden cost of outdated economic statistics

August 7, 2025

EABL posts 12.2% profit surge, strengthens regional footprint despite rising illicit trade

August 1, 2025
1049795356

Maximizing Your Pension Contributions

August 1, 2025

The functional role of narrative in financial markets

August 1, 2025

Tanzania’s protectionist shift and what it means for Kenyan entrepreneurs and regional trade

July 31, 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