1. PENSION FUND-INDIVIDUAL CHOICES.
What is your Choice?
25 YEARS OLD
‘’I am too young to be thinking of
pension’’
35 YEARS OLD
‘’I will start contributing
towards a pension at 40’’
55 YEARS OLD
‘’I should have started
saving towards a pension
30 years ago’’
75 YEARS OLD
‘’I wish I started when saving
towards pension when I got my
first job’’

2. WHY PENSION SCHEMES?
A Pension Plan
Is a savings plan during active work lifetime
Used as a motivation strategy by employers
The principle objective:
Provision of funds upon
Termination of employment services
• Change of employment
• Ill health
• Emigration
Retirement from service
For the dependants in the event of loss of life.

3. • Monthly Contribution - Kes.5,000/=
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
25 27 29 31 33 35 37 39 41 43 45
Accumulated
amount(KES)
AccumulatedFundsat 8% InterestRate
3,154,934
1,698,892
367,070
When to set your financial objective (s)

4. Your Scheme - TAX PROVISIONS
The Pension Plan Provides a maximum tax relief of KShs.240,000 per annum or 30% of
pensionable salary per member whichever is lower. Investment income on tax
relieved amount is tax exempt.
Illustration
Assumed Monthly
Salary
Assumed Monthly
Contribution Taxable Monthly Salary
50,000 5,000 45,000
70,000 7,000 63,000
100,000 10,000 90,000
200,000 20,000 180,000

5. Your Scheme - TAX PROVISIONS
Contributions
The Pension Plan Provides a maximum tax relief
of KShs.240,000 per annum or 30% of
pensionable salary per member whichever is
lower. Investment income on tax relieved
amount is tax exempt.
Withdrawal
Commutation tax free amount of KShs.60,000
(with effect from 1st January 2010) for every
year contributed (max.10 years) for all
withdrawers.

6. TAXATION AT WITHDRAWAL
Commutation tax free KShs.60,000 (with effect from 1st January 2010)
for every year contributed (max.10 years) for all withdrawers.
However there are two tax brackets for withdrawers:
Early withdrawal before attaining 15 years in the scheme or retirement:
10 on first KShs.121,968
15 on next KShs.114,912
20 on next KShs. 114,912
25 on next KShs. 114,912
30 on amount in excess of 466,704
Withdrawal after 15 years in the scheme or
Retirement (from age 50):-
10 on first KShs.400, 000
15 on next KShs.400, 000
20 on next KShs.400, 000
25 on next KShs.400, 000
30 on amount in excess of 1,600,000

7. CONT: TAXATION AT WITHDRAWAL
A 50 year old employee Y withdrawal after 10 years in a
retirement plan having accumulated 1M
See illustration below:
Accumulated Fund 1,000,000
Total Tax free
Amount 600,000 (60,000*10yrs)
Taxable Amount 400,000
Tax Amount 40,000 (10*400,000)
Net Pay 960,000

8. THE NEW NSSF ACT 2013
The National Social Security Fund (NSSF) Bill, 2013 received presidential assent
therefore repealing the NSSF Act (Cap 258) and replacing it with the NSSF Act,
2013 with effect from January 10, 2014.The Commencement date was later pushed
to 31st May 2013(court injunction in place)
With the new bill in place, contribution are going to be calculated based on the table
below
Period from
Commencement Date
Lower Earnings Limit for
contributions to NSSF (Tier I)
Upper Earnings Limit for
contributions to NSSF (Tier II)
1
st
Year 6,000 50% National Average
Earnings (KSs.18,000)
2
nd
Year 7,000 1 *National Average Earnings
3
rd
Year 8,000 2 *National Average Earnings
4
th
Year 9,000 3*National Average Earnings
5
th
Year onwards Lower Earnings Limit (Average
Statutory Minimum Monthly
Basic Wage
4* National Average Earnings

9. IMPLEMENTATION OF CONTRIBUTIONS RATES
Salary*(Scheme Rate -
6%)
Salary*(Scheme Rate -
6%)
Above
Tier II
(Salary – 18,000)*6% (Salary – 18,000)*6%
Tier II (18,000-6,000)*6%= 720 (18,000-6,000)*6%= 720 1,440
Tier I 6,000 *6% = 360 6,000 *6% = 360 720
Employee Employer Total

10. IMPLEMENTATION OF NSSF RATES.
Illustrations
Assume that a member earns KShs.50,000.as his pensionable salary (wages). The
current contribution to the scheme is (7.5%/7.5%) employer/employee.
Contributions into the private scheme are assumed net of NSSF.
Scenario 1(current)
NSSF Private SRBS Total
ER EE ER EE ER EE
Contribution 200 200 3,550 3,550 3750 3750
Total Per Month 7,500

11. IMPLEMENTATION OF NSSF RATES.
Scenario 2: No opt-out option – Year I
Tier 1.Contributions at 6% to a maximum salary of 6,000.
Tier 2.Contributionsat 6% of the salary amount over and above 6,000up to the Upper
Earnings Limit in 1st Year, (50% National Average Earnings - KShs.18.000).
NSSF Private SRBS
ER EE ER EE
Contribution - Tier I 360 360 - -
Contribution - Tier II 720 720 - -
Contribution at 6% for
Salary above the Upper
Earnings Limit of
KShs.18,000 (KShs.32,000)
- - 1,920 1,920
Contribution above 6%
(1.5%)
- - 750 750
Totals 1,080 1,080 2,670 2,670
Grand total P.M 7,500

12. IMPLEMENTATION OF NSSF RATES.
nario 3 Opt-out allowed- Year I
1.Contributions at 6% to a maximum salary of 6,000.
2.Contributions at 6% of the salary amount over and above 6,000 up to the Upper Earnings Limit in 1st Year, (50%
onal Average Earnings - KShs.18,000).
NSSF Private SRBS
EE ER EE ER
Contribution - Tier I 360 360 - -
Contribution - Tier II - - 720 720
Contribution at 6% for
Salary above the Upper
Earnings Limit of
KShs.18,000 (KShs.32,000)
- - 1,920 1,920
Contribution above 6%
(1.5%)
- - 750 750
Totals 360 360 3,390 3,390
Grand total P.M 7,500