This archive report was first published on 27 April 2020.
As the coronavirus pandemic continues to affect businesses, the Retirement Benefits Authority (RBA) has announced a relief measure for companies struggling to meet their pension obligations.
On April 27, 2020, RBA chief executive Nzomo Mutuku signed a statement allowing employers in hardest hit sectors, such as travel and hospitality, to notify the authority of measures taken to contain costs, including suspension, reduction of contribution rates, or stoppage.
According to the statement, pensionable employees on unpaid leave will be considered temporarily absent from work, and contributions from both the employer and employee will be suspended for the period they remain unpaid or the maximum period defined in the scheme rules.
Employers can also vary contribution rates or suspend employee-employer contributions temporarily, but only after seeking approval from employees directly or through representatives.
However, companies that have filed winding up notices will bear the full costs of employee and employer pension obligations.
Where employers fail to submit contributions on time, the regulator will determine outstanding amounts and deferred notice payments, and seek RBA approval of an agreed remedial action plan.
The Sh1.3 trillion pensions industry is facing its toughest test, with some schemes reporting defaults by employers, which could adversely affect their ability to meet member expectations during the Covid-19 period.
Association of Retirement Benefit Schemes chairman Simon Nyakundi hailed the move, saying it allows employers flexibility to navigate the financial crisis.
