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. The enactment of this Act filled a regulatory vacuum which had existed in Kenya. At the time the Authority came into existence, retirement benefits schemes in Kenya were regulated by fragmented legislation, mostly Trust and Income Tax Laws. The absence of specific retirement benefits regulations allowed schemes to adopt different styles of operation. Commonly, sponsors (employers) dominated the operations of industry while members and beneficiaries were largely marginalized.
Cases of sponsors keeping poor records of scheme members funds to the extent of members benefits not being easily determined at the time of retirement were quite rampant. In other instances sponsors fraudulently diverted members contributions into their business interests. As a result, majority of the schemes therefore lacked funds to pay their members on retirement. In the 1990’s, the industry was replete with cases of unpaid, underpaid and delayed benefits to entitled members, not to mention cases of outright theft of benefits. The Authority was thus established to facilitate industry reforms and, most importantly, ensure that members’ interests are protected. Schemes are now distinctly separate entities from the sponsors, established under an irrevocable trust and administered by a legitimately appointed board of trustees.
Up to 50% of the trustees must be member nominated. Trustees take full liability for the schemes, and can be prosecuted for any mismanagement. Sponsors remit members’ contributions to the scheme account or to the custodian within ten days of the deductions. The funds are then invested by fund managers across a beneficiary’s range of investment instruments available in the market to maximize returns at the lowest risk possible. The schemes keep detailed and updated records of members and assets which are independently audited every year