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Occupational Retirement Benefit Scheme

These are employer sponsored arrangements, set up under irrevocable trust. Upon being set up the scheme is a separate legal entity.

The principle objective of setting up an Occupational Retirement Benefits Scheme is to provide for employees upon their retirement or for their dependants on the unfortunate demise of an employee.

 


As an employer, you need to be able to attract and retain high calibre staff. One of the ways in which several leading organisations do this is through the establishment of an Occupational Retirement Benefits Scheme.

Your occupational retirement schemes can either be:

  • a defined contribution scheme, or
  • a defined benefit scheme.

With the defined contribution scheme, which has proven to be very popular in the East African region, the amount or rate of contribution is determined at the start of the scheme.

At the time of retirement, the overall benefit is determined by the total amount of contributions and the accrued interest earned on the contributions.

Tax benefits
For the year 2013, the Pension/ retirement scheme provides a maximum tax exemption of KShs.240,000 per annum (Kshs.20,000 per month) or 30% of pensionable salary per member whichever is lower. Investment income on tax exempted amount is tax exempt.

Assumed Monthly Salary

Assumed Monthly Contribution (employee + employer contribution)

Taxable Monthly Salary

50,000

5,000

45,000

70,000

7,000

63,000

100,000

10,000

90,000

200,000

25,000

180,000

 

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