Companies that are short of money can now apply for discontinuation or suspension of employer-retirement contribution to pension scheme until the covid-19 pandemic eases.
Employers in the struggling sectors like travel and hospitality can notify the regulator of measures taken to control costs such as suspension, reduction of contribution, or stoppage.
“Pensionable employees on paid 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. The employer and/or Trustees are advised to notify the Authority of the same,”a statement signed by chief executive Nzomo Mutuku.
The regulator also said employers should exercise their right to sway the contribution rates. Employers can also suspend employee-employer contributions temporarily after approval from employees either directly or by a representative.
However, the regulator has also stated that where employers fail to make their contributions on time, trustees will have to determine the outstanding amounts, the deferred notice payments, and seek RBA approval of agreed helpful action plan.
Simon Nyakundi, RBA schemes chairman, has welcomed the move saying it enables employer’s flexibility during these tough times of the Covid-19 financial crisis.