ADVOKS GLOBAL · KENYA
Income Tax Act
22A. Deductions in respect of contributions to registered pension or provident funds
Edition: 2026-07-01 · In force
22A. Deductions in respect of contributions to registered pension or provident funds
(1)Notwithstanding section 16(2)(d) and (e), the deduction in respect of contributions of an employee in a year shall be limited to the lesser of–(a)the sum of the contributions made by the employee to registered funds in the year; or(b)thirty per cent of the employee’s pensionable income in the year; or(c)three hundred and sixty thousand shillings (or, where contributions are made to registered funds of the employer in respect of a part year of service of the member, thirty thousand shillings per month of service).(2)Notwithstanding section 16(2)(d) and (e), the deduction in respect of the contributions made by an employer in a year under defined contribution provisions of registered funds shall be limited to the sum of deductible contributions of the employer in the year under defined contribution provisions of registered funds on behalf of members of the funds:Provided that, in respect of each member, the sum of the deductible contributions of an employer in a year under the defined contribution provisions of registered funds on behalf of a member of a registered fund means the amount by which the lesser of–(a)the sum of the contributions in the year made by the employer on behalf of the member under defined contribution provisions of registered funds including contributions made out of surplus funds as required under section 22 (6); and by the member to registered funds of the employer;(b)thirty per cent of the member’s pensionable income from the employer; or(c)three hundred and sixty thousand shillings (or, where contributions are made to registered funds of the employer in respect of a part year of service of the member, thirty thousand shillings per month of service),exceeds the deductible contributions made by the member in the year to registered funds of the employer under subsection (1).(3)Notwithstanding section 16(2)(d) and (e) the deduction in respect of the contributions made by an employer in a year under defined benefit provisions of registered funds shall be limited to the amount by which the lesser of–(a)the sum of the contributions made by the employer and by the employees in the year to registered funds in respect of members of the defined benefit registered funds of the employer; or(b)thirty per cent of the sum of the pensionable incomes from the employer in the year of members of defined benefit registered funds of the employer; or(c)three hundred and sixty thousand shillings times the number of full-year members of defined benefit registered funds of the employer, exceeds the sum of–(i)the deductible contributions made in the year to registered funds of the employer by members of registered funds of the employer under subsection (1); and(ii)the amounts deducted by the employer for the year for contributions made under defined contribution provisions of registered funds under subsection (2) in respect of the members of the defined benefit registered funds.(4)In determining the deductible amounts that can be made to registered funds by employees and by employers, subsection (1) shall be applied before subsection (2) and subsection (2) shall be applied before subsection (3).(5)Pension funds in respect of an employee may be transferred to another registered fund or registered individual retirement fund and not be treated as a withdrawal under section 3(2)(c)–(a)where an employee retires or terminates his employment with an employer and joins the services of another employer and requests funds to be transferred from the former employer’s registered fund to the new employer’s registered fund; or(b)where an employer establishes a new registered fund and transfers the existing pension rights of an employee to that new registered fund; or(c)where an employee terminates his employment with an employer and requests funds, which would otherwise be withdrawn or commuted as a lump sum, to be transferred to a registered individual retirement fund; or(d)where an employee and the employer agree mutually to transfer the funds relating to the existing retirement benefit rights of the employee from one registered fund of the employer to another registered fund of that employer provided that the trust deeds of both registered funds allow such a transfer; or(e)where an individual beneficiary directs that all funds in a registered individual retirement fund be transferred directly to another such fund:Provided that, in all cases, the Commissioner is notified in such form as he may from time to time direct.(6)Where a defined contribution registered fund is determined by an audit to have surplus funds, such funds shall be allocated to the accounts of members in lieu of contributions by an employer in each subsequent year until the surplus is exhausted.(7)Where a registered fund is wound up, any surplus funds therein shall be deemed to be the funds of the employer and shall be immediately withdrawn by the employer unless the trust deed in respect of such registered fund specifies the contrary.(8)For the purposes of this section, contributions made to the National Social Security Fund shall be deemed to be contributions made to a defined contribution registered fund.