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WHY PERSONAL PENSIONAL PLAN?
Enjoying a comfortable retirement requires careful planning and if you’re like most people, you’re worried about saving enough for retirement. It can seem pretty overwhelming. How much do I need? What’s the best way to save? It’s natural for you to have these questions. Together, we can determine how much you really need as well as the best ways to save.
What's the best way to save? Saving for retirement doesn’t have to be complicated. It requires a commitment to your plan as you systematically put aside the money for your future. It’s never too early or too late to start saving. The key is to set goals and get started.
A Personal Pension Plan is a specially designed savings plan to make provision for retirement to individuals. It enables one to build up funds by making periodic contributions into a high yielding retirement fund to provide retirement savings and/or investment benefits.
Creating a retirement strategy is vitally important. You need to start saving for retirement as soon as you start earning income. The sooner you start, the more you’ll accumulate. A Personal Pension Plan will ensure you have a consistent source of income and allow you to maintain your lifestyle in the future.
Besides individuals, Personal Pension Plans can also be convenient retirement savings tool for chamas, SACCOs, NGOs and SMEs looking to secure the financial well-being of their valued members or employees during their retirement years.
WHAT YOU NEED TO KNOW
How Do I Determine the Appropriate Amount to Contribute?
1. Determine your needs in retirement. Try to determine when you want to retire and how much you'll need to have saved to afford the lifestyle you dream of having. Consider future expenses, future sources of income and unexpected events. 2. Set goals and start saving. The longer you wait to begin saving, the more you will have to save to achieve your goals. 3. Identify potential obstacles. We can assist you identify potential obstacles to a comfortable retirement. including health care costs, inflation, fewer pensions, the uncertain future of Social Security and the risk of outliving your money. 4. Contribute to a retirement plan and take advantage of potential tax benefits. Many retirement plans provide additional tax benefits. 5. Keep your retirement savings intact. Don’t withdraw or borrow from your retirement accounts unless it’s absolutely necessary. If you do, you may incur taxes and penalties and lose the opportunity to enjoy compounded earnings on your withdrawals.
Are the Contributions and Income Arising from it Guaranteed?
Yes. Both are guaranteed. The contributions have a 100% capital guarantee as they are invested in a guaranteed fund. The income arising out of investing the contributions is also guaranteed, with a minimum return of 4%.
Are There Any Tax Benefits?
Your monthly salary is not subjected to PAYE for the amount you contribute up to a maximum of KES 20,000 Per month into the Plan. If for instance your monthly salary is KES 100,000 Your monthly contribution to the scheme is KES 10,000. The amount subject to PAYE is KES 95,000
What Happens when You Leave or Change Your Job? 5
0% of your contributions plus accrued interest is paid to you in cash (less applicable taxes Your employer’s contributions is however locked till you reach age 50 and in the meantime you can choose to either leave it in the scheme and it shall earn income as usual or; move it the retirement scheme of your new employer or; move it to an individual retirement plan with an insurance company of your choice
What Happens if You Die?
100% of your contributions plus accrued interest is paid to your nominated beneficiary immediately (less applicable taxes). 100% of your employer’s contributions plus accrued interest is also paid to your nominated beneficiary immediately (less applicable taxes)
What Happens if You Become Incapacitated Whilst Working or After Leaving Work Or Retire on Grounds of Ill-Health?
100% of your contributions plus accrued interest is paid to you (less applicable taxes). 100% of your employer’s contributions plus accrued interest is also paid to you (less applicable taxes)
What Happens When You Retire?
By law, the normal retirement age is 60 years. However early retirement is allowed at 50 years. You can take 1/3rd of the Total Retirement Fund as cash (less applicable taxes). The remaining 2/3rd of your Total Retirement Fund is converted into a fixed monthly pension which shall be paid to you at the end of every month till you die.