The Retirement Benefits (Post Retirement Medical Fund) Guidelines

Legal Notice 192 of 2018

This is the latest version of this Legal Notice.
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Legal Notice 192 of 2018
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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 (POST RETIREMENT MEDICAL FUND) GUIDELINES

LEGAL NOTICE 192 OF 2018

  • Published in Kenya Gazette Vol. CXX—No. 130 on 26 October 2018
  • Commenced on 26 October 2018
  1. [Revised by 24th Annual Supplement (Legal Notice 221 of 2023) on 31 December 2022]

1. Citation

These guidelines may be cited as the Retirement Benefits (Post-Retirement Medical Fund) Guidelines.

2. Interpretation

In these guidelines, unless the context otherwise requires—"employment-related emoluments" include allowances, bonuses, commissions, overtime remuneration, and any other fluctuating allowances;"medical cover provider" means—
(a)a post-retirement medical fund;
(b)the National Hospital Insurance Fund established by the National Health Insurance Fund Act (Cap. 255); or
(c)an insurer, broker or medical insurance provider registered under the Insurance Act (Cap. 487);
"medical fund rules" means rules relating to the establishment, administration and management of post-retirement medical funds;"member" has the same meaning assigned to it under section 2 of the Act;"post-retirement medical fund" means a fund established within a scheme to which contributions are made and from which the costs of medical benefits can be met as shall be determined in accordance with the medical fund rules;"scheme" means an occupational retirement benefits scheme registered under the Act for the provision of cash payments, including one-off and regular payments, when a member exits the scheme;"segregated" means that mean post-retirement medical funds shall be administered and managed jointly with scheme funds but shall be invested and reported separately in the statutory reports of the scheme;"spouse" means a wife or husband of a member whose marriage is recognised under any written law in Kenya; and"trustee" means a trustee of a scheme establishing a post-retirement medical fund and includes a trust corporation.

3. Objectives of the guidelines

The objective of these guidelines is to facilitate the establishment, regulations and supervision of the management of post-retirement medical funds by—
(a)setting out the framework for the management and administration of post-retirement medical funds;
(b)providing guidance to schemes to provide for additional voluntary contributions by members in respect of post-retirement medical funds;
(c)providing guidance on transfers and access to post-retirement medical funds; and
(d)other such guidance as may be required from time to time.

4. Establishment of medical funds

(1)A scheme shall make provisions in the scheme rules to allow its members to make additional voluntary additional contributions in respect of the funding of a post-retirement medical fund.
(2)The trustees may seek, in writing, the professional advice of an actuary when determining the design and funding of a post-retirement medical fund, including advice on contribution levels that shall be expected to be made in order to meet the target set for the medical benefits of members upon retirement.

5. Contributions

(1)A member, sponsor or both shall make contributions to a post-retirement medical fund in accordance with the medical fund rules.Provided that—
(a)any contribution by the sponsor shall be supported by the sponsor's resolution in writing, which shall be submitted to the Authority; and
(b)all contributions shall vest in the member immediately.
(2)The medical fund rules shall allow for the variation of contribution rates upon reasonable notice to the trustees.
(3)The contributions into a post-retirement medical fund shall be—
(a)a fixed percentage of the member's pensionable emoluments, including other employment-related emoluments; or
(b)a shilling amount.
(4)The contribution amount or rates may be based on a target level of post-retirement medical benefits.

6. Administration and investment

(1)Each post-retirement medical fund shall be administered and managed by trustees to the exclusive benefit of members and their' beneficiaries.
(2)The trustees may appoint new service providers for the post-retirement medical fund or may retain the service providers of the scheme.
(3)Each post-medical retirement fund shall be segregated from the funds of the scheme.
(4)The contributions made into a post-retirement medical fund shall be invested in accordance with the investment policy of the scheme:Provided that each scheme shall be required to prepare a separate investment strategy for the post-retirement medical fund where the value of the medical fund is at least fifty million shillings.
(5)The provisions of the Act and regulations thereunder in respect of reporting, communication, disclosure, administration and management of schemes shall apply in respect of post-retirement medical funds.
(6)The annual scheme benefit statement shall disclose the contributions made to the post-retirement medical fund and the investment income for the period under consideration.
(7)Except as may otherwise be agreed with the sponsor, the administration and management expenses of a post-retirement medical fund shall be paid out of the medical fund.

7. Access

(1)Medical fund rules shall provide that a member shall not be permitted to access the benefits while the member remains in the employment of the sponsor.
(2)A member may, subject to the approval of the trustees, be allowed to access the medical benefits on the ground of ill health or if the member becomes incapacitate due to ill health.
(3)Medical fund rules shall specify how the funds shall be accessed:Provided that—
(a)the scheme shall allow members a period of one year from the date of retirement to exercise their option under this paragraph; or
(b)on exit from the employment of the sponsor before the attainment of retirement age, the medical funds shall be treated in the following manner—
(i)the funds may be transferred to another post-retirement medical fund elected in writing by the member:Provided that the scheme shall, within sixty days from the date of the election, transfer the medical funds to the medical fund elected by the member;
(ii)the post-retirement medical fund may defer access to the benefits by the member until the member attains retirement age; or
(iii)the member may access the medical funds in the form of medical benefits.
(4)A member may opt for the payment of the total amount of accrued benefits from a post-retirement medical fund if—
(a)that member leaves employment before attaining retirement age on the ground of emigrating from Kenya without the intention of returning to reside in Kenya; and
(b)the trustees have approved the payment of the retirement benefits to that member and submitted, at least fourteen days before the payment of the benefits, the approval to the Authority.
(5)Scheme rules may allow members to access their medical benefits in any of the following ways—
(a)retaining the funds within a post-retirement medical fund for the purpose of purchasing a medical cover;
(b)retaining the funds within a post-retirement medical fund for the purpose of offsetting any medical expenses incurred as and when they fall due;
(c)transferring the accrued amount to a medical cover provider other than another post-retirement medical fund for the purpose of purchasing a medical cover or offsetting any medical expenses incurred as and when they fall due; or
(d)purchasing an annuity for the purpose of paying annual medical cover premiums.
(6)The benefits contemplated in paragraph (5) (a), (c) or (d) may be accessed by a spouse at the option of the member.
(7)On the death of a member, the benefits shall be paid to the beneficiaries in accordance with the medical fund rules.

8. Transfer of member's portion

The trustees may amend the scheme rules to allow members who have attained retirement age to transfer a portion of their scheme benefits to a medical cover provider:Provided that a member—
(a)shall not transfer more than ten percent of the accrued benefits before commutation to the medical cover provider; and
(b)may transfer all the accrued benefits from additional voluntary contributions to the medical cover provider.

9. Actuarial valuation

(1)Where a sponsor contributes to a post-retirement medical fund and the fund's design provides for guarantees regarding the level of medical benefits a member shall be entitled to, the consent of the sponsor shall be required in determining the level and design of the guarantees, including before amending the level and design of the guarantees.
(2)A post-retirement medical fund with the guarantees specified in subparagraph (1) shall be required to conduct actuarial valuations of the fund at least once in every three years.
(3)The scheme rules shall specify how deficits or surpluses in the post-retirement medical fund shall be offset or utilised.
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History of this document

31 December 2022 this version
26 October 2018
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