FREQUENTLY ASKED QUESTIONS (FAQ'S)
1. Does the Scheme have any plans of building affordable houses that members can procure?
Since 2008, the Scheme has largely focused its investments in real estate on high end property developments whose return on investment has been decent. Earnings from the investment forms part of what is shared/credited to members accounts and hence benefiting all equitably.
The DB Fund is not able to acquire additional property for low-cost housing now given that property investments stand at 40% which is above the regulatory limit set by RBA of 30%.
However, the DC Fund is presently developing reasonably priced apartments along Kirichwa Road, Kilimani Area of Nairobi that will provide an opportunity for members to own houses. The Fund will continue to explore the possibility of undertaking a low-to-medium cost housing in the future.
2. How do I utilize my accrued benefits for the purpose of getting a house?
The Cabinet Secretary Treasury in September 2020 released the regulations on how members can utilize 40% of their accrued retirement benefits to purchase of a residential house.
The Fund has commenced the process of reviewing the Trust Deed & Rules and will soon communicate the rules and requirements that will apply for one to qualify to use his/her benefits for the purpose of mortgage loans.
3. What alternative does a retiring member have other than procuring annuities from an insurance company? Can’t a member have both his DB and DC monthly pension come from the Scheme.
In response to concerns from retiring members, the Scheme effective January 2020 established an Income Drawdown Fund (IDF) that will operate as a sub-fund within the DC Fund. The Income Drawdown Fund is an arrangement that allows a member at retirement to draw his/her retirement benefits into regular instalments while the balance remains invested.
Retiring members therefore have the option of choosing KPPF’s Income Drawdown Fund as an alternative to annuities from insurance companies. The Secretariat will continuously engage and sensitize members on this product.
4. Can members whose terms of employment has changed from permanent to contract access their benefits?
Currently and according to the Scheme’s Trust & Rules, one cannot access retirement benefits while still in the employment of the sponsor. The benefits remain deferred until the member withdraws from the Sponsor’s employment.
The Scheme is in discussions with the Sponsor on the possibility of enrolling the staff on contract to the members of the scheme.
5. When is the Provident Fund going to be wound up and members paid?
Following approval by the Sponsor, the DB Fund Trustees appointed Ernst & Young in October 2019 to handle the winding up process for the now closed Provided Fund.
The liquidator concluded reconciliation of PFA accounts was in 2020 and submitted to the Retirement Benefits Authority (RBA) as the law requires.
As at to date, all PFA members who had left the Scheme through retirement, withdrawal or death have been paid their benefits.
For members who are still in service, the benefits were transferred to their individual member account in the Defined Contributions as a one-off lump sum contribution.
The only payments that are remaining are for those former employees whose banks details are not readily available in our records. For these members, the Liquidator is planning to do a newspaper advert during this month of August requesting them to provide current bank details. All going well, we hope to finally conclude the winding up process by December 2021.
6. What arrangements does the Fund have for medical cover for members who have retired?
The Scheme has in place an arrangement with an insurance company through which retirees access medical cover upon payment of required premiums. In support of this arrangement and to have many retirees enroll for the medical cover, the Scheme pays the annual premiums for those interested and recovers the same from their pension in twelve equal instalments.
Plans are however underway for establishment of a pre-funded post-retirement medical fund through which members will be able to save for their medical cover while still in service. Details of the proposed medical scheme will be shared once all the necessary considerations and approvals are obtained.
7. Does the Board of Trustees have plans for employees on contract/temporary terms of employment to join the Fund?
The Trustees have continued to engage the Sponsor on the possibility of employees on contract/temporary terms joining the Fund for them to save for their retirement just like their colleagues on permanent terms. The Sponsor is looking into the various factors relating to this matter including its financial implications before advising on the way forward.