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Pension Annuity

An annuity is an insurance policy that gives you a guaranteed income for the rest of your life or for a fixed amount of time. You can use your pension fund to buy an annuity that will provides you with a regular income after retirement.

The annuity can be taken individually or jointly with a spouse. If the annuity is shared with a spouse, it reverts to the surviving spouse in case one dies before retirement age. It is paid on a regular basis according to your preference whether monthly, quarterly, semi-annually or annually for life.


Features of a Pension Annuity fund

Annuities are appropriate financial products for individuals seeking stable, guaranteed retirement income.¿¿ 

Guaranteed period:

This is a period of years during which annuity payments are guaranteed to be paid to the annuitant and/or his beneficiaries whether the annuitant is alive or not. This is meant to mitigate against loss of invested funds in event of an early death. If an annuitant survives the guaranteed period, the payments continue until death regardless of how long they live.

Single or Joint Life

A retiree has a choice of taking an annuity on his/her life or together with a spouse. In event of a joint life, the payment of annuity reverts to the surviving spouse and it is payable at a rate of 50% or 100% until death of the surviving spouse.


To mitigate against inflation, a client may choose to purchase an annuity that increases either by 3% or 5% on the anniversary of the policy. The initial amount for this policy will normally be significantly lower compared to non-escalating policy.For non-escalating annuities the amount payable does not change during the entire period of the policy.


Annuity payments in excess of Kshs. 25,000 per month are taxed. Any figure above Kshs. 25,000 is subjected to usual PAYE rates.No tax is payable from age 65. Annuity in arrears

Annuity in arrears

Britam’s annuity pays in arrears. This means that once the funds are received the initial payout is made at the end of the month. Funds received before 15th of the month are paid at the end of the same month. Funds received after the said dates are paid in the following month together with the second payout.

  • Enrolment form
  • Copy of ID
  • PIN number
  • Age of annuitant (and age of spouse – if joint life)
  • Gender of the annuitant
  • Purchase Price – Lump sum funds
  • Guarantee period option preferred
  • Escalation rate – if applicable
  • Minimum age: 55 years – This being the early retirement age prescribed by the
  • Maximum age: 75 years
  • Minimum amount: Kshs. 600,000
  • Pension Funds: A retiring member of a Pension scheme can access as a lump sum a maximum of 1/3 of their retirement fund at retirement while the remaining 2/3 have to purchase a pension annuity.
  • Provident Funds: A Provident Fund pays the accumulated retirement fund as a lump sum. A retiring member of a Provident Fund can use part or their entire retirement fund to purchase an annuity.

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