RETIREMENT BENEFITS AUTHORITY AND COVID-19
Many employers and employees will want to know what is this all about the RBA and the impact does has in the industries especially with the COVID-19 Pandemic -Retirement Benefits Authority (RBA) is a regulatory body under the National Treasury, established under Retirement Benefits Act. The Retirement Benefits Act was enacted as part of the on-going reform process in the financial sector in order to bring the retirement benefits industry under a harmonized legislation, to address the many problems that have hitherto faced the industry.
According to the latest data from the Retirement Benefits Authority (RBA) shows the pandemic will have a dampening effect on employers and trustees of defined benefit pension schemes.
“The growth in the retirement benefits sector is projected to drop in the first half of 2020 due to Covid-19 which has in the shortest time negatively impacted financial markets and predicted to significantly affect the global economy,” a report from regulatory body says in part.
The impact of COVID 19 on RBA Contributions for both the Employer and Employee:
RBA recently advised employers to exercise their right to vary the contribution rates adding that they can also suspend employee-employer contributions temporarily upon seeking approval from employees directly or by representatives confirming the action.
RBA, however, insisted on companies that have filed winding up notice will bear full costs of employee and employer pension obligations.
Cash-strapped companies can now apply for suspension or discontinuation of employer-retirement contributions to pension schemes until the coronavirus pandemic eases.
Employers in hardest hit sectors such as travel , hospitality and other sectors can notify it of measures taken to contain costs among them suspension, reduction of contribution rates or stoppage.
What about the employees currently on Leave?
Pensionable employees on unpaid leave will be considered as being temporarily absent from work and the contributions of both employer and employee shall be suspended for the period they remain unpaid or the maximum period defined in the scheme rules. It is the responsibility of the employer and/or Trustees to notify the Authority of the same.
What next after the Kenya Tax Laws (Amendment) Act 2020 for RBA during the Covid-19 Pandemic?
The Retirement Benefits Authority brought to the attention of the pension industry, the Kenya Tax Laws (Amendment) Act 2020 that was assented by His Excellency President Uhuru Kenyatta on the 25th April 2020.
The new Act, has amended Section 38 of the Retirement Benefits Act (1997) to allow partial access of retirement benefits for purposes of purchase of a residential house.
CHRPK Linnet Idagiza
HR and Capacity Development Consultant