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This policy provides cover for the trustees, the employees, the employer company and the scheme itself in event of claims brought against them. The policy provides cover for settlement on legal action and for the costs of defending the action.

With the enactment of the Retirement Benefits Act (1997) which established Retirement Benefits Authority, Pension Fund Trustees are now personally responsible for any actions and decisions they make on the day to day management of the fund.

In the past, prior to the establishment of Retirement Benefits Authority, traditional responsibility of the trustees was far below the many statutory duties and obligations that now exist.

Failure by trustees to perform these obligations or comply with legal requirements or exercise reasonable skill and care in their actions may put their personal assets at risk. Trustee’s liability and penalties are laid down in Section 37 of the RBA Act. Other potential liabilities may arise from duties delegated to officers like the Administrator, Portfolio Manager, Insurer, Employee, Employer and Intermediary. Examples of these liabilities include:

  • Unwise Investment Strategy
  • Failure to identify dependants as per the terms of the Act
  • Failure to correctly calculate tax liability of a member on withdrawal
  • Failure to ensure that the Administrator has sufficient Fidelity Cover

The above may arise due to the implication that a trustee may delegate functions but not responsibility. He will be liable for the acts of the officers as defined in the Act.

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The following is not covered under this policy;

  • The policy does not cover fines of penalties imposed by law or exemplary damages in any matter deemed uninsurable under the law.
  • Bodily injury, sickness, disease, death of any person
  • Any fact, act or omission of which notice has been given under the policy
  • Personal profit or advantage gained by an insured not legally entitled.
  • It does not cover willful or intentional acts by trustees e.g. fraudulent or dishonest acts of insured.
  • Any litigation existing before the inception of the policy.
  • Pollution claims/Nuclear loss or damage
  • Policy does not cover failure by the trustees to secure funds to the scheme in accordance with the Trust Deeds or failure to collect contributions from the employers.
  • Total Number of trustees
  • Total fund value
  • Limit of desired liability
  • Any known or reported incident that might translate into a claim
  • Latest financials on the fund

The policy covers losses arising from:-

  • Damages
  • Judgement settlements
  • Legal fees/costs (not fines or penalties imposed by law)

The scope of Trustee’s Liability has now widened and exposure of trustees to liability claims has increased. The Insurance Market in Kenya has come up with a competitively priced Pension Trustee Liability Insurance Policy that provides protection for the trustees, the employees, the employer and the fund itself for claims brought against them for actual or alleged wrongful acts which have placed the fund’s assets at risk.


All institutions/companies that handle pension funds schemes.

  • A wide definition of insured persons to include trustees and their employees.
  • Insured persons to also include spouses, estates, heirs or legal representatives of trustees and their employees, the pension fund itself corporate trustee company and the sponsoring employer company.
  • Coverage against claims for actual or alleged breach of trust, breach of statutory provision.
  • Coverage against claims for neglect, error or omission.
  • Coverage against claims for misstatements or misleading statements.
  • Coverage against losses arising from damages, judgement settlements and legal fees or expenses incurred by insured which are necessary to defend or appeal a claim covered by this policy.


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