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An umbrella pension scheme is a single, professionally run retirement scheme that many different employers join, each getting their own section under one shared structure. For a business that wants to offer a pension, or to contract out of NSSF Tier II, without the cost and hassle of building a scheme from scratch, an umbrella pension scheme is often the simplest route. This guide explains what umbrella schemes are, how they differ from standalone schemes, who the main providers in Kenya are, and what they mean for you as an employee.
A quick note: pension rules and NSSF limits change over time, and the details here reflect the position as of February 2026. Confirm specifics with the Retirement Benefits Authority (RBA) or the scheme provider.
The quick answer
- What it is: one large pension scheme, run by a provider, that many unrelated employers share.
- Who runs it: a professional administrator with its own trustees, overseen by the RBA.
- Why use it: it is a ready-made, lower-cost way to offer a pension or to contract out of NSSF Tier II.
- Best for: small and mid-sized employers, though large ones use them too.
What is an umbrella pension scheme?
Think of an umbrella pension scheme as a shared building with many tenants. The provider owns and runs the building, the trustees, the administration, the investment management and the compliance, while each employer rents its own floor, a ring-fenced section for its own staff. Members of one employer are kept separate from another, but everyone benefits from the shared professional management and the economies of scale that come with pooling many employers together.
Because an umbrella pension scheme is registered with the RBA and can pass the Reference Scheme Test, it is one of the most popular vehicles employers use to contract out of NSSF Tier II. Instead of building and running their own scheme, they simply join an established umbrella and route Tier II there.
Umbrella vs occupational scheme
| Feature | Umbrella scheme | Occupational scheme |
|---|---|---|
| Who runs it | A provider, shared by many employers | One employer, for its own staff |
| Setup effort | Low, join an existing scheme | High, build from scratch |
| Cost | Shared, usually lower | Borne alone, usually higher |
| Control | Less, follows the provider’s design | Full control over design |
| Best for | Small and mid-sized employers | Large employers with scale |
For the wider category these both belong to, see our guide on contracted-out pension schemes.
Why employers choose umbrella schemes
The appeal is mostly practical. Setting up a standalone scheme means appointing trustees, drafting rules, registering with the RBA, hiring an administrator and shouldering ongoing governance, a heavy lift for a smaller business. An umbrella pension scheme hands all of that to a provider who already does it at scale. The employer gets a compliant, professionally managed pension almost off the shelf, usually at a lower cost per member because the fixed costs are spread across many companies. It also removes a lot of the governance risk, since experienced professional trustees carry that responsibility.
That is why umbrella schemes have become the default way many Kenyan employers offer a pension and contract out Tier II. The trade-off is less control: you accept the provider’s structure, fund options and fee schedule rather than designing your own. For most smaller employers, that is a trade well worth making.
Main umbrella scheme providers in Kenya
Several established administrators and insurers run umbrella pension schemes that employers join. Well-known names include specialist administrators such as Zamara, Enwealth and Octagon, insurers and asset managers like ICEA Lion, Jubilee, Britam and CIC, and public-sector-linked administrators such as CPF. Each has its own fund choices, fees, service levels and track record, so employers should compare them rather than default to the first name they hear.
We are reviewing these providers individually so you can compare them on returns and fees. For now, our roundup of the best personal pension schemes in Kenya is a good orientation to the market.
What employees should know
If your employer uses an umbrella pension scheme, the good news is that your savings are still your own, kept in your own member account within the scheme. You can see your balance, and if you change jobs you can usually transfer or preserve your benefits rather than lose them. The questions to ask are the same as for any scheme: what returns has it delivered, what fees does it charge, and how do I access my statements? Because an umbrella pension scheme is shared, service is often well-organised and digital, which makes staying on top of your pension easier.
And as always, you can add your own personal pension on top for extra savings and tax relief. For the full picture, see our complete guide to retirement planning in Kenya.
How much does an umbrella scheme cost?
There is no single price, because fees vary by provider and by the size of your workforce. Typically you will see a mix of an administration fee and an investment management fee, often charged as a percentage of the assets under management, sometimes with a small per-member charge. The attraction of an umbrella pension scheme is that these costs are shared across many employers, so the per-member cost is usually lower than running your own scheme. The thing to watch is the total fee load over time, because even a seemingly small annual percentage compounds into a large sum over a working life. Always ask a provider for a full, all-in fee breakdown before you commit.
Just as important as the fee is the net return, what members actually earn after costs. A slightly more expensive umbrella pension scheme that consistently delivers stronger net returns can leave your staff far better off than a cheaper one that underperforms. Fees matter, but they matter in the context of performance, not on their own.
How to choose an umbrella scheme
- Net returns: look at the scheme’s track record after fees, over several years, not one good year.
- Total fees: get the full breakdown, administration plus investment plus any per-member charges.
- Governance: who are the trustees, and how strong is the provider’s reputation and oversight?
- Service and technology: can members see balances online, and is support responsive?
- Fund options: does it offer a sensible range, including lower-risk options for those near retirement?
Weigh those five together. The cheapest umbrella pension scheme is rarely the best, and the most expensive is not automatically the strongest; the winner is the one that delivers the best net outcome for members with solid governance behind it.
The bottom line
For most employers, an umbrella pension scheme is the easiest, most cost-effective way to offer a proper pension and to contract out of NSSF Tier II, without taking on the full weight of running a scheme alone. For employees, it means your Tier II and any extra savings sit in a professionally managed, regulated scheme you can track and carry between jobs. As with any pension decision, judge it on net returns, fees and governance, and an umbrella scheme can be a genuinely good home for your retirement money.
What if you are self-employed?
An umbrella pension scheme is joined through an employer, so if you work for yourself it is not the route for you. Instead, the same providers that run umbrella schemes almost all offer an individual pension plan (IPP) designed for exactly this situation. An IPP gives a freelancer, business owner or gig worker the same professional management and tax relief, without needing an employer. If that is your position, a personal plan is your version of the umbrella scheme, and it is well worth setting one up so you are not relying on NSSF alone in retirement.
Frequently asked questions
Is an umbrella pension scheme safe?
It is registered with and regulated by the RBA, with professional trustees and administration. No scheme is risk-free, but umbrella schemes benefit from scale and experienced governance. Still check returns and fees.
Can an individual join an umbrella scheme?
Umbrella schemes are joined through an employer. If you are self-employed or want your own, you would typically use an individual pension plan instead, which many of the same providers offer.
What happens to my money if I change jobs?
Your benefits remain yours. Depending on the rules, you can transfer them to your new scheme or an individual plan, or preserve them until retirement. Keep your member records so you can track them.
Can an umbrella scheme be used to contract out of NSSF Tier II?
Yes, provided it is registered and passes the Reference Scheme Test. Many employers use umbrella schemes precisely because they are a ready-made contracting-out vehicle.
Disclaimer: The content on Sarafu is for educational and informational purposes only. It does not constitute financial, legal, or tax advice. Pension rules and NSSF limits change; information here was current as of February 2026. Always confirm current details with the Retirement Benefits Authority and the scheme provider, and consider consulting a licensed advisor before making decisions.
