KNH Pension Scheme: Who is eligible to join?

By Chebet Kwemoi & Priscah Angwenyi

1. Who is eligible?

An eligible employee under the scheme rules means a full-time permanent employee of the Sponsor.

2. What are the other saving avenues/options (permanent/ contract)?

Employees employed under contract terms are not eligible to join the KNH pension scheme but can join Individual Pension Schemes that have been licensed with the Retirement Benefits Authority. These types of funds are available even for people who are not employed or work within the informal sector.

3. How far can one go with a pension?

A pension is payable for lifeproviding insurance against longevity risk. You retire at age 60 and start earning a pension today, the amount will be paid to you even if you live to 100 years.

4. Nomination of Beneficiaries

A beneficiary is an individual who will receive all or part of your benefits in the unfortunate event of your death and should be carefully selected. It is important to ensure that your beneficiary information is accurate and up to date.

What does the Law say?

The Retirement Benefits Act, of 1997 provides for treatment of death benefits as indicated below:

“Upon the death of a member of a scheme, the benefit payable from the scheme SHALL NOT FORM part of the estate of the member for administration and shall be paid out by the trustees in accordance with the scheme rules.”

The Retirement Benefits

(Occupational Retirement Benefits Schemes) Regulations 2000 states that;

“The scheme rules shall provide that upon the death of a member the benefits payable from the scheme shall be paid to the nominated beneficiary and if the deceased member had not named a beneficiary, then the trustees shall exercise their discretion in the distribution of the benefits to the dependents of the deceased member:

Provided that the trustees may refuse to pay the nominated beneficiary and the reasons for such refusal shall be recorded.”

What to consider when completing the form?

• Who is dependent on you?

• Who will suffer most if you are not there today?

• How should the benefits be split among your beneficiaries adding up to 100%?

• If you have beneficiaries who are minors, who will the guardian be?

• How much money is available for your beneficiaries?

Updating the beneficiary form is encouraged in the following events: i. You change your status; say you were single and you are now married with kids. The same case applies if you were married and now divorced ii. Upon the unfortunate death of your listed beneficiary

Take charge and nominate your beneficiaries today. Ask yourself “Why would you let other people decide who will be paid your hard-earned savings?”

To nominate your beneficiaries, kindly get a form for completion at the Pensions Office.

5. What is the importance of pension?

Pension helps to maintain and sustain the standard of living after retirement. It enables one to cater to basic needs, for example, food, housing, and medical needs, and provides a safety net as you no longer have any monthly salary or allowance, even more, no insurance benefits.

Why a retirement plan?

Wisdom from the Bible on Planning Ahead

Proverbs 13:16 “A wise man thinks ahead; a fool doesn’t and even brags about it!”

Proverbs 6:6-8 “Go to the ant, you sluggard; consider its ways and be wise! It has no commander, no overseer or ruler, yet it stores its provisions in summer and gathers its food at harvest.”

Most people currently struggle with their existing salaries, hence one can only imagine how they will struggle with no salary at all. In this case, one needs to plan for retirement to avoid the “Future You” coming to give the “Present You” a piece of their mind.

Reasons you should plan for retirement: i. Ensure consistency in your lifestyle ii. Financial independence in retirement regardless of the impact of inflation iii. People are tending to live longer due to advances in technology and medicine iv. Increase in expenses in old age especially medical expense v. Have peace of mind the standard of living after retirement. It enables one to cater to basic needs, for example, food, housing, and medical needs, and provides a safety net as you no longer have any monthly salary or allowance, even more, no insurance benefits.