The Retirement Benefits (Minimum Funding Level and Winding-up of Schemes) Regulations

Legal Notice 120 of 2000

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Citation
Legal Notice 120 of 2000
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Retirement Benefits Act
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Legal Notice
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LAWS OF KENYA

RETIREMENT BENEFITS ACT

THE RETIREMENT BENEFITS (MINIMUM FUNDING LEVEL AND WINDING-UP OF SCHEMES) REGULATIONS

LEGAL NOTICE 120 OF 2000

  • Published in Kenya Gazette Vol. CII—No. 64 on 13 October 2000
  • Commenced on 13 October 2000
  1. [Amended by Retirement Benefits (Minimum Funding Level and Winding Up of Schemes)(Amendment) Regulations, 2005 (Legal Notice 55 of 2005) on 10 June 2005]
  2. [Amended by Retirement Benefits (Minimum Funding Level and Winding Up of Schemes)(Amendment) Regulations, 2006 (Legal Notice 63 of 2006) on 16 June 2006]
  3. [Amended by Retirement Benefits (Minimum Funding Level and Winding Up of Schemes)(Amendment) Regulations, 2007 (Legal Notice 94 of 2007) on 15 June 2007]
  4. [Amended by Retirement Benefits (Minimum Funding Level and Winding Up of Schemes)(Amendment) Regulations, 2008 (Legal Notice 76 of 2008) on 20 June 2008]
  5. [Amended by Retirement Benefits (Minimum Funding Level and Winding Up of Schemes)(Amendment) Regulations, 2009 (Legal Notice 86 of 2009) on 12 June 2009]
  6. [Amended by Retirement Benefits (Minimum Funding Level and Winding Up of Schemes)(Amendment) Regulations, 2015 (Legal Notice 112 of 2015) on 19 June 2015]
  7. [Amended by Retirement Benefits (Minimum Funding Level and Winding Up of Schemes)(Amendment) Regulations, 2016 (Legal Notice 100 of 2016) on 24 June 2016]
  8. [Revised by 24th Annual Supplement (Legal Notice 221 of 2023) on 31 December 2022]

1. Citation

These Regulations may be cited as The Retirement Benefits (Minimum Funding Level and Winding up of Schemes) Regulations.

2. Application

These Regulations shall apply to all schemes.

3. Interpretation

In these Regulations—"court" means the High court of Kenya;"individual retirement benefits Scheme" means a scheme established for the benefit of individual beneficiaries for purposes of paying a retirement benefit;"occupational retirement benefits schemes" means a retirement benefits scheme established by employers for the benefit of the employees.

4. Minimum funding level of the scheme

(1)A scheme fund shall be deemed to be below the minimum funding level if—
(a)in the case of an occupational retirement benefits scheme—
(i)the assets of the scheme are less than one hundred per centum of the value of the accrued liabilities of the scheme;
(ii)the scheme is unable to meet liabilities as and when they fall due; or
(b)in the case of an individual retirement benefits scheme the scheme is unable to meet its liabilities as and when they fall due.
(2)Where the Authority is of the opinion that a scheme fund is below the minimum funding level, the Authority shall directly such scheme to submit an actuarial valuation report together with a remedial plan within thirty days from the date of such direction, setting out the arrangements intended to eliminate the deficiency in the scheme fund.
(3)Where the Authority finds that a remedial plan submitted in accordance with paragraph (2) is consistent with the provisions of the Act and the regulations made thereunder, and it is satisfied that the arrangements set out therein shall raise the funding level of the scheme in accordance with this regulation it may approve the remedial plan.
(4)Where the Authority is not satisfied that the remedial plan submitted in accordance with paragraph (2) shall raise the funding level of a scheme in accordance with this regulation, it may appoint an interim administrator to manage the scheme in accordance with the provisions of section 45 of the Act, or direct the scheme to amend the remedial plan or submit a new remedial plan within thirty days from the date of such direction, and such amendment or new remedial plan shall be accompanied by an actuarial report in respect of the amendment or new remedial plan.
(5)A scheme shall implement the terms of the remedial plan duly approved by the Authority under this regulation within a period of three years for a scheme on discontinuous basis, and within a period of six years for a scheme on ongoing basis from the date of the approval.Provided that—
(a)The Authority may—
(i)permit a scheme to amend such remedial plan, from time to time, at intervals of not more than ten years.
(ii)recommend to the Cabinet Secretary to vary in writing the period of implementing the terms of the approved remedial plan to such period as it may deem appropriate;
(b)where any return submitted to the Authority during the currency of such remedial plan shows, in the opinion of the Authority, that the remedial plan will not improve the funding level of the scheme in accordance with this regulation, the Authority may withdraw its approval of the remedial, plan and the scheme concerned shall, within thirty days from the date of withdrawal of the approval, prepare a further remedial plan to which the provisions of this regulation shall apply; and
(c)where any such return shows, in the opinion of the Authority, that the financial condition and the funding level of the scheme is sound, the Authority may communicate with the trustees of the scheme to that effect and on receipt of such communication the obligations of the scheme in respect to the remedial plan shall terminate immediately.
[L.N. 55/2005, s. 2, L.N. 63/2006, s. 2, L.N. 86/2009, s. 2.]

5. Winding up of scheme

(1)A scheme shall not be de-registered unless the winding up process has been determined subsequent to a final actuarial valuation done on a winding up basis and the benefits of all members transferred to other schemes to purchase a retirement benefit.
(2)Where the Authority is of the opinion that—
(a)a scheme is m such an unsound financial condition or its funding is below the minimum funding level and that arrangements by the trustees to improve the condition are ineffective, impracticable or unsatisfactory; or
(b)a scheme is in breach of section 28(1)(a) and (c) of the Act;
the Authority, subject to section 28(2) of the Act may apply to the court for an order to windup the scheme.
(3)The court may make an order in accordance with paragraph (2), subject to the provisions contained in paragraphs (4) to (10).
(4)The provisions of the Companies Act (Cap. 486) shall apply mutatis mutandis to the winding up of a scheme under this regulation in so far as the said provisions refer to the winding by the court in terms of the Companies Act, (Cap. 486) and in so far as that said provisions are applicable and not inconsistent with the Act and the regulations made thereunder.
(5)The Authority shall have the right to be heard in all petitions for winding up a scheme.
(6)The court may direct that the provisions of the Companies Act, (Cap. 486) referred to in paragraph (4) may, for the purpose of the winding up of a scheme be suitably modified in an particular case if the court is satisfied that having regard to the circumstances ofthe scheme concerned, it would be impracticable or onerous to comply with the said provisions in every particular and that in spite of such modification the interests of the creditors and members of the scheme will remain sufficiently safeguarded.
(7)In the winding up of a scheme the value of the interests and benefits of the members shall be ascertained in such manner as the court may direct.
(8)The liquidator appointed pursuant to the winding-up order issued under these Regulations shall give the Authority such information as the Authority may from time to time require and shall whenever he intends to apply to the court for instructions report to the Authority who shall be entitled to be heard in person of by a representative at any such application, and may itself make an application to the court in reference to the winding up process.
(8A)The liquidator shall be required, in the preparation of the preliminary accounts, to provide for the distribution of surpluses identified which shall be on a 50-50 basis between the members and the sponsor.
(9)The fees payable to the liquidator shall be borne by the scheme at such rates as shall be determined by the court issuing the winding up order.
(10)The committee of inspection for the purposes of winding up a scheme shall include the Authority sponsors, members and creditors.
(11)In the event of the winding up of a scheme the benefits of members of the scheme still in the service of the sponsor shall not be paid but shall be transferred to a registered individual retirement benefits scheme specified in writing for that purpose by the members.
(12)The members of a scheme shall be treated as deferred creditors, and their claims against the scheme in their capacity as members shall not be settled until the debts of ordinary creditors have been fully paid.[L.N. 55/2005, s. 3, L.N. 63/2006, s. 3, L.N. 94/2007, s. 2, L.N. 76/2008, s. 2, L.N. 100/2016, s. 2.]

6. [Deleted by L.N. 55/2005, s. 4.]

7. Voluntary dissolution of a scheme

(1)Subject to the provisions of the Act and this regulation, a scheme may be wound up or dissolved in such circumstances as may be specified for that purpose in its rules and in the manner provided by such rules, and the assets of the scheme shall in that event be distributed as prescribed by the said rules.Provided that—
(a)a resolution by trustees to voluntary dissolve in winding up a scheme shall not be effected until the authority has approved in writing;
(b)schemes transferring to Umbrella Schemes or Individual Retirements Benefits Schemes shall not be compelled to go through the winding up process but shall submit to the Authority the following-
(i)a trustee resolution indicating the reason behind winding up and transfer;
(ii)current audited accounts or fund statement for the scheme;
(iii)signed member consent forms acknowledging the benefits to be transferred;
(iv)nil accounts to close the scheme;
(v)proof of transfer; and
(vi)any other information as required by the Authority.
(2)A liquidator shall be appointed as prescribed by the scheme rules, but such appointment shall be subject to the approval ofthe Authority, and the liquidation shall be deemed to commence as from the date of such approval.
(3)During the liquidation of a scheme, the provisions of the Act and these regulations shall continue to apply to such scheme as if the liquidator were the trustee of the scheme.
(4)The liquidator shall within thirty days from the date of appointment deposit with the Authority preliminary accounts signed and certified by him as a correct record reflecting the assets and liabilities of the scheme at the commencement of the liquidation process, and the manner in which it is proposed to realise the assets and to discharge the liabilities, including any liabilities and contingent liabilities to or in respect of members.
(4A)The liquidator shall be required, in the preparation of the preliminary accounts, to provide for the distribution of surpluses identified in the scheme as follows—
(a)surpluses accruing from investment income shall be used wholly to augment members' benefits;
(b)surpluses arising from unvested benefits in the scheme shall be refunded to the scheme sponsors.
(5)The Authority may, in its discretion, and of the scheme direct the liquidator to furnish a report on the preliminary accounts drawn up by an independent actuary or other competent person approved by the Authority.
(6)The preliminary accoounts and report referred to in paragraph (5) shall be availed for inspection by interested persons, at the office of the Authority and at the registered office of such scheme for a period of thirty days.
(7)The Authority may, at the cost of the scheme, cause to be published in the Gazette, and in a widely circulated newspaper, a notice stating the period during which, and the places at which the preliminary accounts and report may be inspected and any interested person who has an objection to the said preliminary accounts and report may lodge their objections in writing with the Authority and a copy thereof shall be served on the liquidator within a period stated in the notice, not being less than fourteen days as from the last day on which the aforesaid documents were inspected.
(8)Where no objections are lodged with the Authority under paragraph (7), the Authority shall direct the liquidator to complete the liquidation process.
(9)Where objections are lodged with the Authority under sub-regulation (7), the Authority may, after considering the said objections, direct the liquidator to amend the preliminary accounts or, give such other directions as are not inconsistent with the rules of the scheme, and such direction shall be binding upon the liquidator.
(10)The liquidator shall, within fourteen days of receipt by him of any direction of the Authority under paragraph (9), provide a copy thereof to every member and creditor of the scheme, and the liquidator or any person aggrieved by any such direction of the Authority may apply to the Appeals Tribunal, established under section 47 of the Act, within thirty days after such direction has been communicated to the liquidator, for an order to set aside the decision of the Authority, and the Appeals Tribunal may confirm or vary the said decision as it deems fit.
(11)Where the Authority's directions have not been varied or set aside by the Appeals Tribunal, it shall direct the liquidator to complete the liquidation process.
(12)The liquidator shall within thirty days after the completion of the liquidation, lodge with the Authority the final accounts signed and certified by him as a correct record showing the assets and liabilities of the scheme at the commencement of the liquidation process and the manner in which the assets have been realised and the liabilities, including any liabilities and contingent liabilities to or in respect of members, which have been discharged.
(13)The provisions of the Companies Act (Cap. 486) shall apply mutatis mutandis to the dissolution of a scheme in terms of this regulation, in so far as they relate to voluntary winding-up and in so far as the said provisions are applicable and not inconsistent with the Act and these regulations.
(14)All claims against the scheme shall be proved to the satisfaction of the liquidator, subject to a right of appeal to the Appeals Tribunal, and the liquidator may require any claim to be made by way of an affidavit.
(15)Where the Authority is satisfied that the final accounts are correct and that the liquidation process has been completed, it shall de-register the scheme and thereupon the scheme shall be deemed to be dissolved.
(16)Upon dissolution of the scheme and subject to the Limitation of Actions Act (Cap. 22) no further claim shall lie against the trustees, liquidator or the Authority with respect to the payment of benefits.[L.N. 55/2005, s. 5, L.N. 94/2007, s. 3, L.N. 112/2015, s. 2.]

8. Qualifications of a liquidator

A liquidator appointed for purposes of these Regulations shall be a person who have not—
(a)provided professional services to the scheme for a period of five years before the resolution to wind up the scheme;
(b)been sentenced to imprisonment for a period of six months or more by a court of competent jurisdiction;
(c)been adjudged bankrupt;
(d)been previously involved in the management or administration of a scheme which was de-registered for failure on the part of the management or administration;
(e)been disqualified under any other written law.
[L.N. 94/2007, s. 4.]
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