CPF Financial Services has obtained the approval of the Retirement Benefits Authority (RBA) to manage tier II contributions from employers who opt out of the National Social Security Fund (NSSF).
The firm has been cleared to be a custodian of the tier II contributions – by workers earning above Sh18,000 -- through its Taifa (Umbrella) Pension Fund, which is designed for private and public sector employers and staff.
CPF is the largest registered pension administrator in Kenya, providing pension services to over 200 employers with an estimated 500,000 members and 8000 pensioners.
The fund is now seeking to onboard employers who opt out of the tier II statutory contributions by dangling enhanced benefits, including post-retirement medical savings and medical cover in retirement.
“By joining Taifa, an employer enjoys the benefit of opting out of NSSF Tier II statutory contributions to instead provide pension through a scheme with superior benefits,” CPF said in a statement.
Private pension schemes have been wooing employers to divert the graduated contributions from the NSSF.
The new 2013 NSSF Act, whose implementation began at the end of February allows employers to channel the higher contributions (Tier II) to private pension schemes in a move that opened up a new battlefront between NSSF and the private pension providers.
Estimates seen by the Business Daily project tier II contributions to reach Sh12.43 billion in the 2023/24 financial year before rising to Sh23.82 billion by June 2027 when the new NSSF Act is fully implemented.
Both the private pension schemes and employers are expected to apply to the RBA after, which the regulator grants both parties with contracting out and opting out certificates respectively.
Other private pension schemes including Zamara and Octagon Africa Group have also been angling for a share of the recently unlocked pension billions.
