Product Feature

Description

Individual Retirement

Benefit Scheme (OMIRBS)

A retirement benefits scheme established for the benefit of

individuals

Design Principles

Nature of Contributions

(Funding)

Defined contribution scheme

Minimum Contributions

N/A

Contribution Frequency

Investment Return

Final returns declared at the end of the year.

Underwriting

Termination options

IPS

FUM

Old Mutual Kenya – IRBS Product terms

Controlled Disclosure

Contents

Old Mutual Kenya – URBS & IRBS ProductSpec

Controlled Disclosure

Key principles of the schemes:

OMIRBS allows self-employed individuals and those on fixed-term employment contracts to build their retirement income. It can also be used by employees who are already members of an occupational scheme but are looking for a separate scheme to increase their retirement savings.

The target market of OMIRBS includes:

Benefits to the Client

The Administrator will use its existing system to capture and store members’ contributions and respective fund performance. The system provides high detailed information guaranteeing a high level of transparency for all members.

For either members will not be required to engage in the following:

RETIREMENT BENEFIT SCHEME SPECIFICATION

Investment Allocation

OMIRBS

Strategic asset allocation (investment strategy) will be set out in the Investment Policy Statement (IPS) given to the asset manager by the trustees at launch of the scheme. The trustees may change the IPS to reflect the latest membership profile and investment market conditions.

The following strategic asset allocation (according to IPS) has been adopted by trustees to guide the investment of the OMIRBS funds:

Asset Class 

Strategic Range (%) 

RBA Max Limits % 

Cash & Demand Deposits 

0 - 4 

5% 

Term Deposits 

0 - 20 

30% 

Corporate Bonds & Papers 

0 - 5 

20% 

Government Paper 

30 - 90 

90% 

Domestic Equities 

10 - 25 

70% 

Offshore Investment 

0 - 10 

15% 

Property 

0 - 30 

30% 

Once the above strategies are fully adopted by the schemes, the asset class options may be increased or decreased at the discretion of investment manager in consultation with the trustees; therefore, the above list (at both the strategy option and class option levels) is not exhaustive.

Investment Guarantees

There will be no guarantees on fund values applicable.

The investment decisions ultimately rest with the Trustees, and investment returns offered will depend on market performance of the investments selected.

Investment Returns

Frequency of Returns

Interim returns are declared on a quarterly basis, and final returns on an annual basis after the accounts are audited.

Interim investment returns will be declared quarterly by Trustees at the quarterly meetings. Interim returns will not be credited to the member accounts on a quarterly basis and but will be used to calculate benefits payable to those withdrawing from the scheme during the period before the next quarterly interim results or final returns, whichever is earlier.

Nature of Returns

Monthly contributions received will start earning interest from the 3rd w contribution is received.

The investment management of the two schemes will be separate. Investment returns declared (interim and final) will be market-linked.

Distribution of Returns

To minimise administration requirements especially tax computations, financial year of both schemes will run from January to December.

The interim investment returns are based on quarterly management accounts that are prepared on an accrual basis for purposes of the quarterly trustees meeting and quarterly submission to RBA. The adoption of the accrual basis implies that all accrued but not yet incurred deductions incl. RBA Levy and Audit fees are allowed for. Furthermore, the Trustees have discretion in determining the timing of recognition of unrealized gains and losses on qualifying asset classes and subject to any current or future regulation.

The interim quarterly investment returns declared will be apportioned pro-rata to the member contributions depending on how long the contributions have been in the scheme during that quarter. For example, contributions made at the beginning of January will earn full quarterly return, whilst those made in March will only earn a third of the quarterly return. The actual declaration of return will be made annually, and an adjusted member statement made available for member’s scrutiny.

Existing Members:

Return which, the administrator credits each member’s account with is the final investment returns

On withdrawal:

•Members who withdraw during the year will get year-to-date returns based on the quarterly interim returns declared by trustees up to that date.

•For instance, if a member or an employer group withdraws immediately after a market downturn, the Trustees can take into consideration the effects of the downturn on the returns to use in determining benefit amounts to be transferred out of the scheme. This is to ensure equity between withdrawing and continuing scheme members.

Reinvestment of Returns

The investment return earned on the funds will automatically be credited to members’ accounts (scheme account) as of31st December that year and be reinvested in the subsequent year (Compound income)

Total Fund Value

Withdrawals

Investment Income

Contributions(Regular or transfer of fund or gratuity)

Annual fees/expense &Levies

ADDLESSLESS  

Investments and benefits will be denominated in KES (Kenya Shillings).

For reporting purposes, all offshore investments of the schemes will also be quoted in KES at the prevailing exchange rate.

Mode of Deposit

All payments should preferably be made via check-off, standing order, mobile money, or EFT into OMLAK OMIRBSbank account; however, cash and cheque payments will also be acceptable—bankable directly to the scheme custodial accounts as may be provided from time to time.

Cash payments should be deposited into the respective bank account by the employers/members, while cheques should be submitted to the Administrator. Cheques will then be banked on behalf of the members into the respective scheme’s accounts.

Contribution Allocation

Contributions will be invested according to the investment strategy as set out in the IPS. Contributions will be availed for investment on the 3rd working day following receipt of the funds. For employer contributions, the legislative deadline for all employers to remit all contributions to the administrator by the 10th day in the month following the contributions still applies.

Underwriting

No medical or financial underwriting shall be carried out on this product.

The benefits payable under the scheme will be subject to the prevailing tax regulations in Kenya.

Nature of Benefit Amounts on leaving before retirement

Depending on the reason for exit, the nature of benefit available may differ:

Members may transfer 100% of their accumulated fund value to another registered Retirement Benefit Scheme, and in which case the proceeds will not be taxed.

In the event members (individuals under OMIRBS) terminate their contracts:

If contributions by members are discontinued, then:

Taxation Benefit and Impact

There are several tax incentives available to retirement schemes to encourage retirement savings. The tax benefits accorded are on the contributions made, investment income earned, and benefits paid out.

OMIRBS is registered with both Retirements Benefits Authority (RBA) and Kenya Revenue Authority (KRA) and therefore allows for tax exemptions on contributions and withdrawals to be put in place according to the prevailinglegislation at the time of withdrawal.

Contributions

Contributions to a registered Retirement Scheme, under both URBS and OMIRBS, are tax deductible up to a maximum of KES 240,000 per year (KES 20,000 per month) or 30% of the employee’s gross salary whichever is lower.

Employers’ contributions on behalf of employees to a personal pension scheme are tax deductible subject to the maximum amounts (as stipulated in the above paragraph under Employee). The tax deductibility does not apply to contributions by UN employers.

The investment income derived from tax-exempted is tax-exempt. This favorable tax treatment of contributions will encourage rapid growth of the retirement savings. A statement showing the funds’ growth is then sent out to members after the interest rate is declared at the end of each financial year.

Retirement Benefit Levy

The retirement benefit levy is payable to RBA based on the level of FUM (Funds under management)

Termination Benefits

Members will notify the Scheme Administrator when they wish to withdraw from the scheme. The Administrator will then instruct the Asset Manager to liquidate the necessary assets (or avail the necessary funds if un-invested funds are available). The Administrator will also submit payment details (incl. Member Name, Payment Amount, Bank Details etc.) to the Custodian who will then arrange for the payment to be made to the Member/ Beneficiary (in the event ofdeath of Member).

Termination Reason

Administrator to be notified by

Recipient of the benefit

Death

Nominated Beneficiary

Request before retirement

Member (benefits can be transferred to another registered scheme)

Early retirement

Member

Normal retirement

Member

Irrespective of the reason for termination, the fund redemption process will take 10 working days to complete, and the benefit payable will be: 100% for members whose funds are wholly attributable to their own contributions (i.e. 0% employer’s contributions), 100% FUM will be payable.

Member

Individual

Beneficiary

Normal Retirement Age

Charges will be communicated to schemes’ members as follows:

Type of Fee

OMIRBS

Ongoing Fee

1.30% p.a. of FUM*

Variable Fees:

(depending on level of last audited FUM)

*Ongoing fees (payable to the various service providers) are exclusive of VAT

Composition of Transaction Charges

The charges deductible will be based on the level of FUM and will be deducted on a monthly and annual basis.

The charges deductible monthly are:

The charges deductible annually are:

Retirement Benefit Authority Levy

Size of scheme fund indicated in the latest audited accounts

Annual Levy Rate (% of fund)

FUM < KES 500m

0.20%

KES 500m < FUM < KES 1,000m

0.15%

KES 1,000m < FUM < KES 5,000m

0.10%

FUM > KES 5,000m

0.05%

Guarantees on Charges Payable

The charges listed above will not be guaranteed and will be reviewed subject to a 30-day notice period.

Guarantee Charges

Not applicable.

Joining the scheme: Application for membership

Once your application has been received, you will be issued with an onboarding pack that includes your specific member number under the scheme, membership certificate, specific banking details as well as other service contacts.

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