Pension Trust Deed (Kenya)
Occupational Retirement Benefits Scheme — Retirement Benefits Act No. 3 of 1997
Cover
PENSION TRUST DEED Establishing the [Scheme Name] Under the Retirement Benefits Act No. 3 of 1997, Section 34 Date: [Deed Date]
Parties
THIS DEED is made on [Deed Date] between: 1. EMPLOYER (SETTLOR): [Employer Name], a company incorporated in Kenya with registration number [Employer Reg Number], registered office at [Employer Address], KRA PIN [Employer Kra Pin] (the Employer); AND 2. INITIAL TRUSTEES: (a) [Trustee1 Name], ID/Passport No. [Trustee1 Id]; (b) [Trustee2 Name], ID/Passport No. [Trustee2 Id]; (c) [Trustee3 Name], ID/Passport No. [Trustee3 Id] (collectively the Initial Trustees).
Recitals
RECITALS A. The Employer desires to establish a [Scheme Type] retirement benefits scheme for the benefit of eligible employees pursuant to Section 34 of the Retirement Benefits Act No. 3 of 1997. B. The Employer appoints the Initial Trustees to hold the scheme fund on trust for members and their beneficiaries on the terms of this deed. C. The Initial Trustees accept appointment and shall administer the Fund in accordance with this deed, the scheme rules, the Retirement Benefits Act No. 3 of 1997, and the Retirement Benefits (Occupational Retirement Benefits Schemes) Regulations 2000 (Legal Notice No. 64 of 2000). D. This deed is intended to satisfy Section 34 of the Retirement Benefits Act No. 3 of 1997 and to form the basis for registration with the Retirement Benefits Authority (RBA).
Establishment of the Trust
1. ESTABLISHMENT OF THE TRUST 1.1 The Employer irrevocably settles all contributions upon the Initial Trustees to hold on trust for the members of the [Scheme Name] (the Scheme) and their beneficiaries, on the terms of this deed and the scheme rules. 1.2 The trust shall be known as the [Scheme Name] Trust Fund (the Fund). 1.3 The Fund is established as a separate trust, legally distinct from the Employer assets, in accordance with Section 34 of the Retirement Benefits Act No. 3 of 1997 and Section 78 of the Insolvency Act No. 18 of 2015. 1.4 The trust is irrevocable during the continuance of the Scheme. No part of the Fund may be returned to the Employer except as provided in Clause 9 and with prior written RBA approval.
Trustees and Investment Powers
2. TRUSTEES 2.1 Minimum three trustees, maximum eight. At least one-third shall be member-nominated as required by Section 29A of the Retirement Benefits Act No. 3 of 1997. 2.2 All trustees must complete the RBA mandatory trustee training programme within 12 months of appointment under the Retirement Benefits (Trustees) Regulations 2000. 3. INVESTMENT POWERS 3.1 The trustees shall invest the Fund in accordance with the Retirement Benefits (Investment) Regulations 2000 (Legal Notice No. 104 of 2000), including power to invest in government securities, listed equities on the Nairobi Securities Exchange (NSE), immovable property, guaranteed funds, and other permitted asset classes within RBA prescribed limits. 3.2 Licensed Fund Manager: [Fund Manager] (licensed by the RBA and Capital Markets Authority) is appointed to manage the investment portfolio. 3.3 Licensed Custodian: [Fund Custodian] (licensed by the RBA) is appointed to hold Fund assets in safe custody.
Contributions and Benefits
3. CONTRIBUTIONS 3.1 Employer Contribution: [Employer Contribution Rate], payable by the 15th day of each calendar month. 3.2 Employee Contribution: [Employee Contribution Rate], deducted from each member pensionable salary and remitted by the 15th day of each calendar month. 3.3 All contributions vest irrevocably in the trustees as part of the Fund. 5. BENEFITS 5.1 Normal Retirement at age [Normal Retirement Age]: full accumulated account balance or defined benefit under the scheme rules. 5.2 Early Retirement from age [Early Retirement Age]: calculated under the scheme rules. 5.3 Vesting: employer contributions vest after [Vesting Period]. Member contributions are fully vested at all times. 5.4 Death Benefit: [Death Benefit] 5.5 Benefits are subject to tax under the Income Tax Act Cap. 470 and the Second Schedule thereto.
Administration and Advisers
4. ADMINISTRATION 4.1 Scheme Administrator: [Scheme Administrator] is appointed to maintain member records, calculate contributions and benefits, and prepare scheme accounts. 4.2 A scheme auditor registered with ICPAK shall audit the Fund annually and report to the RBA under Section 40 of the Retirement Benefits Act No. 3 of 1997. 4.3 For defined benefit schemes, an approved actuary (Fellow of the Actuarial Society of Kenya) shall carry out valuations at least once every three years. 7. BENEFICIARY NOMINATIONS 7.1 Members may nominate beneficiaries by completing the prescribed form. The trustees shall distribute death benefits under Section 36B of the Retirement Benefits Act No. 3 of 1997. Where no valid nomination exists, distribution shall follow the Law of Succession Act Cap. 160.
Amendment and Wind-Up
5. AMENDMENT 5.1 [Amendment Procedure] 5.2 No amendment shall reduce the accrued benefit rights of existing members. 9. DISSOLUTION AND WIND-UP 9.1 [Dissolution Procedure] 9.2 On wind-up, the Fund shall be applied in order: (a) costs of wind-up; (b) members vested benefits in full; (c) augmentation at trustees discretion; (d) any remaining surplus subject to RBA approval under the Retirement Benefits (Surplus) Regulations 2012.
General Provisions and Execution
6. GENERAL PROVISIONS 6.1 Governing Law: [Governing Law], including the Retirement Benefits Act No. 3 of 1997, the Trustee Act Cap. 167, the Income Tax Act Cap. 470, and the Insolvency Act No. 18 of 2015. 6.2 Dispute Resolution: Disputes shall be referred to arbitration at the Nairobi Centre for International Arbitration (NCIA) under the Arbitration Act No. 4 of 1995. 6.3 RBA Registration: The Employer shall apply for RBA registration within 30 days of execution under Section 23 of the Retirement Benefits Act No. 3 of 1997. IN WITNESS WHEREOF the parties execute this Pension Trust Deed as a deed on the date first written above. SIGNED as DEED by [Employer Name] Authorised Representative: ________________________ Name: ________________________ Date: [Deed Date] Witness: ________________________ SIGNED as TRUSTEE by [Trustee1 Name] Signature: ________________________ Date: ________ Witness: ________________________ SIGNED as TRUSTEE by [Trustee2 Name] Signature: ________________________ Date: ________ Witness: ________________________ SIGNED as TRUSTEE by [Trustee3 Name] Signature: ________________________ Date: ________ Witness: ________________________
Employer (Authorised Representative)
________________
Signature
Trustee 1
________________
Signature
Trustee 2
________________
Signature
Trustee 3
________________
Signature
What Is a Pension Trust Deed (Kenya)?
A Pension Trust Deed in Kenya conveys rights in land or assets, taking effect once executed by the parties to it.
The Retirement Benefits Act No. 3 of 1997 is Kenya's primary statute governing retirement benefits schemes, enacted by the National Assembly and assented to on 5 January 1998. The Act established the Retirement Benefits Authority (RBA) under Section 3 as the independent statutory regulator for all retirement benefits schemes in Kenya, operating under the oversight of the Cabinet Secretary for National Treasury and Economic Planning. The RBA's mandate under Section 4 of the Retirement Benefits Act No. 3 of 1997 includes licensing, supervising, and regulating retirement benefits schemes; protecting the interests of members and beneficiaries; and developing the retirement benefits sector in Kenya.
Section 34 of the Retirement Benefits Act No. 3 of 1997 provides that every retirement benefits scheme shall be established under a trust deed that complies with the requirements of the Act and the regulations made under it. 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 mandatory content of the trust deed, including: identification of the employer and trustees; the vesting of the fund assets in the trustees; the investment powers of the trustees; the benefit obligations of the trust; and the amendment and dissolution procedures.
The Trustee Act Cap. 167 governs the general law of trusts in Kenya and applies to pension trusts except where the Retirement Benefits Act No. 3 of 1997 provides otherwise. Trustees of pension funds owe fiduciary duties to scheme members — the duty of loyalty, the duty to act prudently in managing trust assets, the duty to diversify investments, and the duty to act in accordance with the trust deed. Breach of fiduciary duty exposes trustees to personal liability under the Trustee Act Cap. 167 and to regulatory sanctions by the RBA under Section 46 of the Retirement Benefits Act No. 3 of 1997.
The trust structure is critical to the protection of pension assets in Kenya. Because the pension fund is held on trust by the trustees — separate from the employer's estate — the fund assets are protected from claims by the employer's creditors in the event of the employer's insolvency under the Insolvency Act No. 18 of 2015. This protective function is one of the primary reasons the Retirement Benefits Act No. 3 of 1997 requires all occupational pension schemes to be structured as trusts.
The Nairobi City County (where most corporate employers are domiciled), the Capital Markets Authority (CMA) under the Capital Markets Act Cap. 485A, and the Kenya Revenue Authority (KRA) all interact with pension trust deeds — the CMA in its oversight of licensed fund managers who invest scheme assets in capital markets instruments, and the KRA in confirming the scheme's registered status for tax exemption purposes under the Second Schedule to the Income Tax Act Cap. 470.
When Do You Need a Pension Trust Deed (Kenya)?
A Pension Trust Deed is required in Kenya in the following specific circumstances.
Every employer establishing an occupational retirement benefits scheme in Kenya must execute a Pension Trust Deed before applying for scheme registration with the Retirement Benefits Authority (RBA) under Section 23 of the Retirement Benefits Act No. 3 of 1997. No employer may lawfully operate a retirement benefits scheme in Kenya without RBA registration, and RBA registration requires the submission and approval of the trust deed.
A Pension Trust Deed is required when a group of employers jointly establish an umbrella retirement benefits fund under the Retirement Benefits (Umbrella Retirement Funds) Regulations 2011 (Legal Notice No. 91 of 2011). Each employer participating in the umbrella fund is bound by the master trust deed governing the umbrella fund, and the deed must be approved by the RBA before any employer commences participating.
The deed is required when an employer converts an unregistered gratuity scheme or provident fund to a registered pension trust, to protect employees' accrued benefits and obtain tax-exempt status under the Second Schedule to the Income Tax Act Cap. 470. Unregistered gratuity funds do not enjoy tax exemption on investment income, whereas registered pension trusts do.
A replacement trust deed is required when the existing trust deed is being fundamentally restructured — for example, when the scheme is converting from a defined benefit to a defined contribution arrangement, when there is a change in the employer's corporate structure following a merger or acquisition governed by the Competition Act No. 12 of 2010, or when the deed contains provisions that no longer comply with updated RBA regulations. Section 37 of the Retirement Benefits Act No. 3 of 1997 requires prior RBA written approval for any amendment to the trust deed.
A Pension Trust Deed is required when an employer is applying for a Tax Compliance Certificate (TCC) from the KRA and wishes to demonstrate the existence of a registered pension scheme as evidence of good employment practice for large employer certification purposes.
Parties in Kenya should prepare a Pension Trust Deed (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 Trust Deed (Kenya)
A valid Kenya Pension Trust Deed under the Retirement Benefits Act No. 3 of 1997 s.34 and the Retirement Benefits (Occupational Retirement Benefits Schemes) Regulations 2000 must include the following key elements.
Parties and Recitals: Full legal name and registered address of the employer (the settlor of the trust); names and addresses of the initial trustees. The recitals should state the employer's intention to establish a retirement benefits scheme for the benefit of eligible employees and the legal basis for doing so under Section 34 of the Retirement Benefits Act No. 3 of 1997.
Establishment of the Trust: A clear declaration that the employer settles the trust fund on the trustees to hold on trust for the benefit of the scheme members and their beneficiaries, in accordance with the scheme rules. The trust must be irrevocable during the continuance of the scheme, protecting member interests against employer interference.
Appointment of Trustees: The names and signatures of the initial trustees; the minimum and maximum number of trustees (minimum three under Regulation 5 of the 2000 Regulations); the proportion of member-nominated trustees required by the RBA (at least one-third of trustees must be elected by members under Section 29A of the Retirement Benefits Act No. 3 of 1997 as amended); and the procedures for appointing and removing trustees.
Vesting of Fund Assets: A declaration that all contributions paid by the employer and employees, and all investment income and gains, vest immediately in the trustees and form part of the trust fund held for the benefit of scheme members. Assets of the trust fund are legally separate from the employer's assets under the Insolvency Act No. 18 of 2015 s.78.
Trustee Powers: Broad investment powers consistent with the Retirement Benefits (Investment) Regulations 2000 (Legal Notice No. 104 of 2000), including the power to invest in listed securities on the Nairobi Securities Exchange (NSE), government securities issued by the National Treasury, real property, offshore investments (subject to RBA limits on offshore holdings), and money market instruments. The investment policy must comply with the asset allocation limits prescribed by the RBA.
Appointment of Professional Advisers: The power to appoint and remove a registered scheme administrator, a licensed fund manager approved by both the RBA and the Capital Markets Authority (CMA), a licensed custodian approved by the RBA, a scheme auditor registered with the Institute of Certified Public Accountants of Kenya (ICPAK), and an approved actuary (for defined benefit schemes) who is a Fellow of the Actuarial Society of Kenya.
Beneficiary Nominations: The procedure for members to nominate beneficiaries under the scheme; the trustees' discretion in distributing death benefits among dependants and nominees under Section 36B of the Retirement Benefits Act No. 3 of 1997; and the treatment of benefits where no valid nomination exists, referencing the Law of Succession Act Cap. 160.
Amendment Clause: A power of amendment allowing the employer (with trustee consent) to amend the trust deed and scheme rules by deed, subject to the mandatory prior written consent of the RBA under Section 37 of the Retirement Benefits Act No. 3 of 1997. No amendment may reduce the accrued benefit rights of existing members.
Dissolution: The procedure for winding up the scheme; the priority order for distributing assets on dissolution (members' vested benefits first, then discretionary benefits, then any surplus returned to the employer subject to RBA approval); and the treatment of unallocated surplus under the Retirement Benefits (Surplus) Regulations 2012.
Execution Requirements: The deed must be executed as a deed under the Law of Contract Act Cap. 23 — signed by the employer's authorised representative and by each trustee, with witnesses to each signature. For corporate employers, the Board of Directors must pass a resolution authorising execution.
Forms-legal.com provides this Kenya Pension Trust Deed template as a starting framework for employers and their legal advisers. The final trust deed must be drafted and reviewed by an Advocate of the High Court of Kenya with pension law expertise and approved by the RBA before any contributions are made to the scheme.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Pension Trust Deed (Kenya) (Kenya) [Legal document template]. Forms Legal. https://forms-legal.com/kenya/financial/agreements/pension-trust-deed-kenya
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Frequently Asked Questions
The Retirement Benefits Authority (RBA), established under Section 3 of the Retirement Benefits Act No. 3 of 1997, is the statutory body responsible for approving all pension trust deeds in Kenya before a scheme may commence operations. Under Section 23 of the Retirement Benefits Act No. 3 of 1997, no person may operate a retirement benefits scheme in Kenya without RBA registration. The RBA reviews the trust deed (and accompanying scheme rules) to ensure compliance with: the Retirement Benefits Act No. 3 of 1997; the Retirement Benefits (Occupational Retirement Benefits Schemes) Regulations 2000; the Retirement Benefits (Investment) Regulations 2000; and RBA Governance Guidelines. The RBA checks that: the trust structure complies with Section 34 of the Act; the trustees meet the fit-and-proper criteria under Section 29 of the Act; the investment policy complies with the permitted asset allocation limits; the benefit provisions meet the minimum standards under Section 36 of the Act; and the amendment and dissolution clauses preserve member rights. The RBA has 30 days to approve or reject a registration application under Section 23(3) of the Retirement Benefits Act No. 3 of 1997, and may request amendments to the deed before granting approval.
Under the Retirement Benefits Act No. 3 of 1997 and the Retirement Benefits (Trustees) Regulations 2000, a trustee of a pension scheme in Kenya must meet the following qualifications. Individual trustees must: be at least 18 years of age; not be an undischarged bankrupt under the Insolvency Act No. 18 of 2015; not have been convicted of a criminal offence involving fraud or dishonesty; and have the capacity to understand financial matters. Corporate trustees (trust companies) must be licensed by the RBA and the Capital Markets Authority (CMA). Section 29A of the Retirement Benefits Act No. 3 of 1997 (as amended) requires that at least one-third of trustees be elected by scheme members through a democratic process specified in the trust deed. Trustees must complete the RBA's trustee training programme — a mandatory online course covering fiduciary duties, investment governance, and benefit administration — within 12 months of appointment. The RBA maintains a fit-and-proper register of trustees and may remove a trustee who fails to meet the standards under Section 46 of the Retirement Benefits Act No. 3 of 1997. Directors and senior officers of the sponsoring employer may serve as employer-nominated trustees, but must be mindful of conflicts of interest in investment decisions.
Once an employer contributes funds to a registered pension trust in Kenya, those contributions generally cannot be reclaimed by the employer. Section 34 of the Retirement Benefits Act No. 3 of 1997 provides that contributions paid into the trust fund vest in the trustees on behalf of members and are irrevocably separated from the employer's assets. This irrevocability is the key protection that prevents employer insolvency from affecting members' pension rights under the Insolvency Act No. 18 of 2015. However, limited exceptions exist: (1) Surplus funds on dissolution — if the scheme rules and trust deed contain a surplus refund clause, and after all members' vested benefits have been fully funded, the RBA may approve a refund of actuarially determined surplus to the employer under the Retirement Benefits (Surplus) Regulations 2012 — this requires RBA's prior written consent and is subject to tax under the Income Tax Act Cap. 470; (2) Employer overpayments — if the employer accidentally makes a duplicate contribution, it may apply to the RBA for a refund of the overpayment, subject to trustee and RBA approval. In no case may employer contributions be reclaimed to fund the employer's operating expenses or repay employer debts.
Pension trust assets in Kenya must be invested in accordance with the Retirement Benefits (Investment) Regulations 2000 (Legal Notice No. 104 of 2000), which prescribe maximum allocation limits for each asset class. The permitted investments and limits include: (1) Government securities (Treasury Bills and Treasury Bonds issued by the National Treasury): up to 70% of fund assets; (2) Listed equity securities on the Nairobi Securities Exchange (NSE): up to 70% of fund assets; (3) Immovable property: up to 30% of fund assets; (4) Guaranteed funds issued by insurance companies licensed under the Insurance Act Cap. 487: up to 100%; (5) Offshore investments (foreign equities and bonds): up to 15% of fund assets, subject to CBK foreign exchange approval under the Central Bank of Kenya Act Cap. 491; (6) Private equity and venture capital: up to 10% of fund assets; (7) Quoted corporate bonds: up to 30% of fund assets. The trustees must appoint a fund manager licensed by both the RBA and the Capital Markets Authority (CMA) to manage the investment portfolio. The fund manager must submit quarterly investment reports to the trustees and annual reports to the RBA. Concentration in a single issuer is limited to 10% of the portfolio to ensure diversification.
The trust structure of a pension scheme is specifically designed to protect member benefits against employer insolvency. Under Section 34 of the Retirement Benefits Act No. 3 of 1997, pension trust assets are held by the trustees on behalf of members — they do not form part of the employer's estate on insolvency. This is confirmed by Section 78 of the Insolvency Act No. 18 of 2015, which provides that assets held on trust by an insolvent person are not available for distribution to the insolvent's creditors. Therefore, if the sponsoring employer is placed in administration, receivership, or liquidation under the Insolvency Act No. 18 of 2015 or the Companies Act No. 17 of 2015, the pension trust fund continues to exist as a separate legal entity administered by the trustees for the benefit of members. However, there are practical risks: (1) If the employer becomes insolvent with outstanding unpaid contributions, those arrears rank as preferential debts under Section 117 of the Insolvency Act No. 18 of 2015, meaning they must be paid to the pension trust before most other creditors; (2) If the scheme is in deficit at the time of insolvency, members may not receive their full projected defined benefit — their entitlement is limited to the available trust assets. The RBA will supervise the wind-up of the scheme in accordance with the Retirement Benefits Act No. 3 of 1997.
Pension benefits paid from a registered retirement benefits scheme trust in Kenya are taxed under the Income Tax Act Cap. 470 as follows. Lump-sum retirement payments: the first KES 600,000 is exempt from tax under the Second Schedule to the Income Tax Act Cap. 470; amounts above KES 600,000 are taxed at graduated income tax rates under the Finance Act 2023, using the current PAYE bands. The trustees (or administrator) must deduct PAYE on the taxable portion and account for it on the KRA iTax portal. Monthly pension annuity payments: taxed as employment income under Section 3(2)(a) of the Income Tax Act Cap. 470, with PAYE deducted by the scheme at the applicable rate after personal relief of KES 28,800 per year. Death benefits paid to beneficiaries: generally exempt if paid as a lump sum under Section 3(3) of the Income Tax Act Cap. 470; taxable if paid as a continuing annuity. Early withdrawal benefits: taxed in full at graduated income tax rates, without the KES 600,000 exemption if the member has not reached retirement age — the Tax Procedures Act No. 29 of 2015 requires reporting to the KRA. Investment income earned by the trust fund itself is fully exempt from tax under the Second Schedule to the Income Tax Act Cap. 470, as long as the scheme maintains its RBA registration.
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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