Financial services group Britam has obtained the approval of the Retirement Benefits Authority (RBA) to handle second-tier NSSF contributions for employers opting out of the State pension fund.
Britam is expected to manage the contributions through three schemes- Britam Umbrella Provident Fund, Britam Umbrella Pension Fund and Britam Individual Pension Scheme.
“Consequently, and in line with our mission to provide you with financial security every step of the way, we are here to assist all eligible employers with the Tier II contracting out process,” Britam said in a notice.
At the same time, the financial services provider is expected to aid employers with the contracting out process by filing pre-requisite opt-out documentation with the RBA on behalf of clients.
Britam becomes the fourth private pension provider to disclose the regulatory nod to handle the tier II NSSF contributions after Octagon Africa, Enwealth Financial Services and CPF Financial Services.
NSSF tier II contributions relate to deductions above the upper earnings limit or Sh18,000 a month.
Total remittance under the new contributory system by an employee includes Sh720 in tier II contributions and Sh360 in tier I contributions (mandatory remitted to the NSSF) with the combined deduction being matched by an employer to Sh1080.
Employers are allowed to pay their tier II contributions to a registered retirement benefits scheme which has been approved by the RBA to receive the contributions in a process referred to as contracting out.
Employers are handed contracting out certificates at the end of the process by RBA and submitted to the NSSF.
The opening up of tier II contributions to private pension funds has opened up a new battlefront between the entities and NSSF.
Estimates seen earlier by the Business Daily placed expected netting from tier II contributions at Sh12.43 billion in the financial year to June 2024 and at a higher Sh23.82 billion by June 2027 when the 2013 NSSF Act is fully implemented.
