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Pension Scheme Rules (Kenya)

Pension Scheme Rules (Kenya)

PENSION SCHEME RULES

Retirement Benefits Act No. 3 of 1997 | Retirement Benefits (Occupational Retirement Benefits Schemes) Regulations 2000

SCHEME NAME: [Scheme Name]

RBA Registration Number: [RBA Registration Number]

Date of Establishment: [Establishment Date]

Registered Office: [Registered Office]

These Rules are made pursuant to the Retirement Benefits Act No. 3 of 1997 and the Retirement Benefits (Occupational Retirement Benefits Schemes) Regulations 2000 (Legal Notice No. 64 of 2000) and govern the administration of [Scheme Name] (the "Scheme").

RULE 1 — ESTABLISHMENT AND OBJECTS

1.1 [Scheme Name] is established as an occupational retirement benefits scheme of the [Scheme Type] by [Employer Name] (BRS No. [Employer BRS Number]) (the "Employer") under a Trust Deed and these Rules for the benefit of eligible employees and their beneficiaries.

1.2 The objects of the Scheme are to provide retirement, early retirement, ill-health retirement, death-in-service, and withdrawal benefits to Members and their dependants in accordance with these Rules and the Retirement Benefits Act No. 3 of 1997.

1.3 The Scheme is registered with the Retirement Benefits Authority (RBA) under Section 23 of the Retirement Benefits Act No. 3 of 1997. The Scheme shall maintain RBA registration at all times and shall comply with all regulatory requirements imposed by the RBA.

1.4 These Rules shall be binding on the Employer, the Trustees, all Members, and all persons claiming benefits under the Scheme.

RULE 2 — MEMBERSHIP AND ELIGIBILITY

2.1 Eligible employees: [Eligible Categories] shall be eligible to join the Scheme.

2.2 Minimum age for entry: [Minimum Age]. Minimum qualifying service: [Minimum Service].

2.3 Membership of the Scheme is compulsory for all eligible employees from the date they meet the entry conditions.

2.4 Normal Retirement Age under these Rules is [Normal Retirement Age], which shall not exceed 65 years as required by Section 36(1) of the Retirement Benefits Act No. 3 of 1997.

2.5 A Member may apply for early retirement upon attaining [Early Retirement Age] subject to the approval of the Trustees. The benefit payable shall be actuarially reduced for defined benefit arrangements.

2.6 A Member who leaves employment before Normal Retirement Age is entitled to receive the vested portion of their Scheme account or a deferred pension under Regulation 20 of the Retirement Benefits (Occupational Retirement Benefits Schemes) Regulations 2000. Employer contributions shall vest fully after [Vesting Period] of pensionable service; forfeiture of vested benefits is prohibited under Section 36(3) of the Retirement Benefits Act No. 3 of 1997.

RULE 3 — CONTRIBUTIONS

3.1 Pensionable salary is defined as: [Pensionable Salary Definition].

3.2 Employee contributions: Each Member shall contribute [Employee Contribution Rate] to the Scheme Fund each month, deducted from salary by the Employer and remitted to the Trustees on behalf of the Member.

3.3 Employer contributions: The Employer shall contribute [Employer Contribution Rate] in respect of each Member each month. Combined employer and employee contributions are deductible up to KES 30,000 per employee per month under Section 15 and Section 22A of the Income Tax Act Cap. 470.

3.4 All contributions shall be remitted to the Scheme Fund [Contribution Remittance Period]. Late remittance shall attract a penalty charge as prescribed by the RBA under Regulation 9 of the Retirement Benefits (Occupational Retirement Benefits Schemes) Regulations 2000.

3.5 The Employer shall maintain individual Member accounts recording each Member's accumulated employee contributions and the allocated employer contributions.

RULE 4 — BENEFITS

4.1 Retirement Benefit: A Member who retires at Normal Retirement Age ([Normal Retirement Age]) shall be entitled to receive the full value of their accumulated Scheme account (for defined contribution) or the formula benefit (for defined benefit) as determined by the Trustees and the Scheme actuary.

4.2 Death-in-Service Benefit: [Death Benefit]. The benefit shall be paid to the Member's nominated beneficiaries or, in the absence of a valid nomination, to the Member's legal personal representative under the Law of Succession Act Cap. 160.

4.3 Ill-Health Retirement: A Member who retires before Normal Retirement Age due to permanent incapacity, certified by a medical practitioner registered under the Medical Practitioners and Dentists Act Cap. 253, shall be entitled to the full accumulated benefit without actuarial reduction.

4.4 Tax treatment: Investment income earned by the Scheme is exempt from income tax, withholding tax, and Capital Gains Tax under the Second Schedule to the Income Tax Act Cap. 470. The first KES 600,000 of a retirement lump-sum is exempt from tax on withdrawal.

4.5 Benefits under these Rules comply with the minimum benefit standards prescribed by Section 36 of the Retirement Benefits Act No. 3 of 1997.

RULE 5 — TRUSTEES

5.1 The Scheme shall at all times have [Number of Trustees] trustees, being the minimum required under Regulation 5 of the Retirement Benefits (Occupational Retirement Benefits Schemes) Regulations 2000.

5.2 Trustees shall be appointed on the basis of: [Trustee Appointment Basis], for a term of [Trustee Term] years, renewable.

5.3 The powers and duties of the Trustees are set out in Section 29 of the Retirement Benefits Act No. 3 of 1997 and include: holding Scheme assets in trust; investing Scheme assets in accordance with the Investment Policy Statement; admitting Members; authorising benefit payments; and ensuring regulatory compliance.

5.4 Trustee meetings shall be held at least quarterly. Decisions shall be made by simple majority of Trustees present and voting, provided a quorum of not less than half the total Trustees is present.

5.5 Each Trustee shall be indemnified from Scheme assets against all liabilities properly incurred in the exercise of their duties, except for liability arising from fraud, wilful default, or gross negligence.

RULE 6 — ADMINISTRATION, GOVERNANCE, AND AUDIT

6.1 Fund Manager: The Trustees shall appoint [Fund Manager], licensed by the RBA and the Capital Markets Authority (CMA) under the Capital Markets Act Cap. 485A, to manage the investment of Scheme assets in accordance with the Investment Policy Statement and the Retirement Benefits (Investment) Regulations 2000 (Legal Notice No. 104 of 2000).

6.2 Scheme Administrator: [Scheme Administrator] is appointed as scheme administrator to maintain Member records, process benefit claims, and prepare regulatory reports.

6.3 Custodian: [Custodian] is appointed as custodian to hold Scheme assets in safe custody.

6.4 Annual Audit: The Trustees shall commission annual audited financial statements prepared by a certified public accountant registered with the Institute of Certified Public Accountants of Kenya (ICPAK), to be submitted to the RBA within six months of the financial year-end.

6.5 Actuarial Valuation: The Trustees shall commission an actuarial valuation of the Scheme at intervals of not more than [Actuarial Valuation Interval], conducted by a Fellow of the Actuarial Society of Kenya (ASK) or a Fellow of the Institute and Faculty of Actuaries (IFoA) approved by the RBA, under Regulation 29 of the Retirement Benefits (Occupational Retirement Benefits Schemes) Regulations 2000.

RULE 7 — AMENDMENT AND DISSOLUTION

7.1 These Rules may be amended by the Employer with the consent of the Trustees, subject to prior written approval of the RBA under Section 37 of the Retirement Benefits Act No. 3 of 1997. No amendment shall reduce or extinguish any accrued Member benefit without the express consent of the affected Members.

7.2 The Scheme may be wound up by the Employer on not less than 12 months' written notice to the Trustees and the RBA. On winding up, the Scheme assets shall be applied in the following priority order: (a) payment of all Scheme expenses; (b) payment of all Member benefits in full; (c) payment of any surplus to the Employer, subject to RBA approval.

7.3 These Rules are governed by the laws of Kenya. Any dispute between a Member and the Trustees relating to benefits under these Rules shall be referred first to the Trustees for determination under their internal complaints procedure, and thereafter to the RBA as the supervisory authority, or to the High Court of Kenya.

SIGNED on behalf of the Employer and the Board of Trustees:

Authorised Signatory — Employer

________________

Signature

Chairperson of the Board of Trustees

________________

Signature

Secretary to the Board of Trustees

________________

Signature

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What Is a Pension Scheme Rules (Kenya)?

Pension Scheme Rules in Kenya are the constitutional document of an occupational retirement benefits scheme — the binding set of regulations that govern the establishment, administration, membership eligibility, contributions, investment management, benefit entitlements, and winding-up procedures of the scheme. The Retirement Benefits Act No. 3 of 1997 — Kenya's primary statute governing retirement benefits schemes — requires every scheme registered with the Retirement Benefits Authority (RBA) to have a trust deed and scheme rules that comply with the requirements of the Act and the regulations made under it.

The Retirement Benefits Authority (RBA), established under Section 3 of the Retirement Benefits Act No. 3 of 1997, is the statutory regulator for all retirement benefits schemes in Kenya, including occupational pension schemes, provident funds, individual retirement benefit schemes, and umbrella retirement funds. The RBA operates under the oversight of the Cabinet Secretary for National Treasury and Economic Planning and is responsible for licensing, supervising, and regulating all retirement benefit schemes to protect the interests of scheme members.

The Retirement Benefits (Occupational Retirement Benefits Schemes) Regulations 2000 (Legal Notice No. 64 of 2000), made under Section 55 of the Retirement Benefits Act No. 3 of 1997, prescribe the minimum contents of scheme rules for occupational retirement benefit schemes. Regulation 4 of the 2000 Regulations requires the rules to address: the name and objects of the scheme; membership eligibility and entry conditions; the contribution rates and basis of calculation; the investment policy and permitted investments; the benefits payable on retirement, death, disability, and withdrawal; the powers and duties of the trustees; the appointment and removal of trustees; the auditing and actuarial valuation requirements; and the amendment and dissolution procedures.

Pension Scheme Rules must be submitted to the RBA as part of the scheme registration application under Section 23 of the Retirement Benefits Act No. 3 of 1997. The RBA reviews the rules to confirm compliance with the Act, the 2000 Regulations, and the RBA Guidelines on Scheme Governance. Once approved, the rules form a binding contract between the employer, the trustees, and all scheme members.

In Kenya, pension schemes enjoy significant tax advantages under the Income Tax Act Cap. 470. Employer contributions to a registered pension scheme are deductible as a business expense up to KES 30,000 per employee per month under Section 15 of the Income Tax Act Cap. 470. Employee contributions are also deductible against employment income up to the same limit. Investment income earned by a registered retirement benefits scheme is exempt from income tax and withholding tax under the Second Schedule to the Income Tax Act Cap. 470.

The Retirement Benefits (Amendment) Act 2021 and the Retirement Benefits (Definitions of Retirement Funds) Regulations 2020 updated the regulatory framework to include additional governance requirements, risk management obligations, and investment diversification rules, all of which must be reflected in the scheme rules to maintain RBA registration.

The legal framework governing the Pension Scheme Rules (Kenya) in Kenya draws on several key statutes and regulatory bodies. Under the Central Bank of Kenya Act (Cap. 491), the Central Bank of Kenya (CBK) regulates banking. The Capital Markets Authority (CMA) regulates securities under the Capital Markets Act (Cap. 485A). Section 84 of the Bills of Exchange Act (Cap. 27) governs promissory notes. The Kenya Revenue Authority (KRA) administers tax obligations. The Microfinance Act No. 19 of 2006 regulates microfinance institutions. The Hire Purchase Act (Cap. 507) governs credit sale agreements. Parties executing a Pension Scheme Rules (Kenya) in Kenya should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Retirement Benefits Act No. 3 of 1997 sets the foundational requirements.

When Do You Need a Pension Scheme Rules (Kenya)?

Pension Scheme Rules are required in Kenya in the following circumstances.

Every employer establishing an occupational retirement benefits scheme for employees must prepare and register Pension Scheme Rules with the Retirement Benefits Authority (RBA) under Section 23 of the Retirement Benefits Act No. 3 of 1997. No scheme may lawfully operate in Kenya without RBA registration, and registration requires submission of the scheme rules and trust deed.

Pension Scheme Rules are needed when an employer with an existing NSSF-only arrangement decides to offer a supplementary occupational pension scheme to attract and retain employees. The scheme rules define the benefit structure — defined benefit, defined contribution, or hybrid — and the contribution rates applicable to the employer and employees.

The rules are required when an umbrella retirement fund established under the Retirement Benefits (Umbrella Retirement Funds) Regulations 2011 (Legal Notice No. 91 of 2011) admits a new participating employer. Each participating employer's arrangement is governed by the fund's master rules together with a participation agreement, both of which must be RBA-approved.

Pension Scheme Rules are required for amendment where the employer wishes to change the benefit structure, increase or decrease contribution rates, change the normal retirement age, or modify the investment policy statement. Under Section 37 of the Retirement Benefits Act No. 3 of 1997, any amendment to the scheme rules or trust deed requires prior written approval from the RBA.

The rules are needed when a scheme undergoes an actuarial valuation required under Regulation 29 of the Retirement Benefits (Occupational Retirement Benefits Schemes) Regulations 2000. The actuary must review the scheme rules to assess the actuarial basis, benefit liabilities, and funding adequacy of the scheme. Actuarial valuations are required at intervals of not more than three years.

Parties in Kenya should prepare a Pension Scheme Rules (Kenya) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under the Central Bank of Kenya Act (Cap. 491), the Central Bank of Kenya (CBK) regulates banking. The Capital Markets Authority (CMA) regulates securities under the Capital Markets Act (Cap. 485A). Section 84 of the Bills of Exchange Act (Cap. 27) governs promissory notes. The Kenya Revenue Authority (KRA) administers tax obligations. The Microfinance Act No. 19 of 2006 regulates microfinance institutions. The Hire Purchase Act (Cap. 507) governs credit sale agreements. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.

What to Include in Your Pension Scheme Rules (Kenya)

Complete and RBA-compliant Pension Scheme Rules in Kenya under the Retirement Benefits Act No. 3 of 1997 and the Retirement Benefits (Occupational Retirement Benefits Schemes) Regulations 2000 must include the following key elements.

Scheme Name and Registration: The full name of the scheme, its registration number with the RBA, the date of establishment, and the registered office address. The scheme name must be unique and not misleading under the Retirement Benefits (Licensing) Regulations 2000.

Objects and Establishment: A statement of the purpose of the scheme — to provide retirement, death, disability, and withdrawal benefits to eligible members. The rules must state whether the scheme is a defined benefit scheme (where the benefit at retirement is a specified fraction of final salary), a defined contribution scheme (where the benefit is the accumulated account balance), or a hybrid scheme combining elements of both.

Membership Eligibility and Entry: The categories of employees eligible to join the scheme; the minimum age and service period (if any) required for entry; the conditions for excluded categories (casual employees, contractors, directors); and the procedure for enrolment, including the forms to be completed under the Retirement Benefits Act No. 3 of 1997 s.26.

Contributions: The rate of employee contributions (expressed as a percentage of pensionable salary); the rate of employer contributions; the frequency and method of remittance to the scheme trustees; and the treatment of arrears of contributions under Regulation 9 of the 2000 Regulations.

Benefits Schedule: Defined retirement benefits (age, formula), early retirement benefits, disability benefits, death-in-service benefits, deferred pension on withdrawal, and commutation options. The rules must comply with the minimum benefit standards under Section 36 of the Retirement Benefits Act No. 3 of 1997.

Trustees: The number of trustees (minimum of three under Regulation 5 of the 2000 Regulations); the appointment process for employer and member-nominated trustees; the term of office; the powers and duties of trustees under the Retirement Benefits Act No. 3 of 1997 s.29; indemnity provisions; and the procedures for trustee meetings and decisions.

Administration and Fund Manager: The appointment of a registered fund administrator under the Retirement Benefits (Fund Managers) Regulations 2000 and the investment of scheme assets through a licensed fund manager. All fund managers must be licensed by the RBA and the Capital Markets Authority (CMA) under the Capital Markets Act Cap. 485A.

Investment Policy: The scheme's investment policy statement, investment objectives, permitted asset classes, concentration limits, and restrictions on related-party investments, consistent with the Retirement Benefits (Investment) Regulations 2000 (Legal Notice No. 104 of 2000).

Audit and Actuarial Requirements: Annual audited financial statements by a certified public accountant registered with ICPAK; actuarial valuations at intervals of not more than three years by a Fellow of the Actuarial Society of Kenya; and submission of annual returns to the RBA.

Amendment and Dissolution: The procedure for amending the scheme rules (requiring RBA approval under Section 37 of the Retirement Benefits Act No. 3 of 1997); the grounds for winding up; the priority order for distributing scheme assets on winding up; and the protection of accrued member benefits on employer insolvency.

Forms-legal.com provides this Kenya Pension Scheme Rules template as a starting point for employers and scheme trustees. Scheme rules must be reviewed by an Advocate of the High Court of Kenya specialising in pension law and submitted to the RBA for approval before the scheme commences operations.

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Reference this free template in an article, syllabus, or research note:

APA

Forms Legal. (2026). Pension Scheme Rules (Kenya) (Kenya) [Legal document template]. Forms Legal. https://forms-legal.com/kenya/financial/agreements/pension-scheme-rules-kenya

MLA

"Pension Scheme Rules (Kenya) (Kenya)." Forms Legal, 2026, https://forms-legal.com/kenya/financial/agreements/pension-scheme-rules-kenya.

BibTeX
@misc{formslegal-pension-scheme-rules-kenya,
  author       = {{Forms Legal}},
  title        = {Pension Scheme Rules (Kenya) (Kenya)},
  year         = {2026},
  howpublished = {\url{https://forms-legal.com/kenya/financial/agreements/pension-scheme-rules-kenya}},
  note         = {Free legal document template}
}

Frequently Asked Questions

Statute-referenced template — Template last modified June 2026

This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer

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