APA gets nod to manage higher NSSF deductions


Catherine Karimi, CEO, of APA Life Assurance Limited and Ashok Shah, the Group CEO of APA Apollo. FILE PHOTO | BCS

APA Life Assurance has become the latest private pension provider to obtain the approval of the Retirement Benefits Authority (RBA) to manage graduated NSSF contributions on behalf of employers for workers earning more than Sh18,000, also known as Tier II contributions.

The underwriter who is part of the Apollo Group is expected to manage the deductions on behalf of individuals, employers and employees through their scheme -APA Umbrella Pension Fund.

The plan will see APA battle other private schemes to attract employers who opt out of the NSSF as a custodian of the higher-tier pension contributions.

“This regulatory approval further solidifies APA Life's position as a reliable and authorized institution for managing Tier II contributions,” said Catherine Karimi, Chief Executive, APA Life Assurance in a statement on Wednesday.

“Employers now have the option to partner with APA Life to handle their obligations, offering convenience and peace of mind while fulfilling their responsibilities towards their employees' social security contributions.”

APA Life Assurance offers individual pensions, corporate pensions and umbrella pension schemes, where a company does not need to set up its own scheme and trustees.

The umbrella scheme provides all the regulatory structures and the corporate only contributes the pension deduction to the scheme.

The Group joins other private pension administrators who have received the regulatory go-ahead to manage the tier II contributions including Octagon Africa, Enwealth Financial Services, CPF Financial Services, ICEA Lion Life Assurance and Britam.

An estimated Sh12.43 billion is up for grabs as private pension managers take on the National Social Security Fund (NSSF) for the higher tier contributions.

The billions in additional pension contributions were unlocked this February from the first-time implementation of the 2013 NSSF Act whose effect had been delayed by a protracted court battle.

Previously, both employers and employee’s contributed a fixed monthly amount of Sh200 each, resulting in a total contribution of Sh400.

However, the new NSSF Act stipulates that the total monthly contribution should be equivalent to 12percent of an employee's monthly salary.

Under the revised rates, 6 percent of the contribution is deducted from the employee's salary, while the remaining 6 percent is paid by the employer. The new rates are applied on a graduated scale.

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