Britam launches an umbrella pension scheme targeting the SME sector

Britam has launched a pension scheme targeting the Small and Medium Enterprises sector.

The Britam Umbrella Pension Scheme targets SME’s without occupational pension schemes and will provide employees with the opportunity to save regularly for a reliable and long term retirement income.

The scheme will pool the retirement investments of multiple employers thereby reducing the average cost per member, enhancing the overall returns and benefits to both the employer and employee due to the economies of scale.

“Most of the pension schemes in Kenya are structured and mainly focus on the formal sector. This fund is meant to bring on board the crucial informal sector to enable employees save for their retirement benefits,” said Britam Asset Managers Acting CEO Jude Anyiko.

Speaking during the launch of the scheme, Mr Anyiko said it will also assist in pension saving for companies and SMEs that lack the muscle to register a scheme or to individually shoulder the costs related to scheme registration.

M. Anyiko said while launching the scheme, Britam was positioning itself in readiness for the NSSF Act which expects all companies to offer pension benefit to staff.

He said any company with a staff compliment of 2 or more employees is eligible to join the scheme which will be managed by professional fund managers and the money invested in line with regulatory guidelines.

In order to lower the operational costs associated with running similar schemes, the new scheme will leverage on a robust distribution network provided by over 30 Britam offices, 80 Family Bank and 160 Equity Bank branches spread out across the country.

The fund will also get investment exposure to private equity and the Real Estates Investments Trust (REITs) provided by Britam Asset Managers,  leading to better returns.

It will allow both the employer and employees take advantage of the generous income tax relief available to members of a registered retirement scheme. This is because the monthly contribution is tax deductible at source before PAYE (Pay As You Earn) is computed.

Registered under the Retirements Benefits Authority (RBA), the scheme also targets registered SMEs with occupational schemes but keen to explore other offers in the market.

It is estimated that Kenya has 7.5 million SMEs, which contribute over 40% of the country’s GDP.

According to the Kenya National Bureau of Statistics, the sector provides approximately 80 per cent of employment and contributes over 92 per cent of the new jobs created, annually. Also, less than 15 per cent of Kenyans are covered by social security.

With growth in the sector, the demand for pension has significantly grown.  

The scheme will not only address the unique nature of the informal sector, but is also meant to encourage a savings culture.

Britam Asset Managers Limited is a wholly owned subsidiary of Britam. Through effective investment management and advisory services, the company currently manages an expanding portfolio that today stands at approximately KShs.55.5 billion worth of investments across various asset classes – fixed income, equities, property, offshore and private equity.

The firm is licensed as a Fund Manager by the Capital Markets Authority (CMA) and the Retirement Benefits Authority (RBA).