NAIROBI, KENYA: County governments have not remitted Sh30 billion to employees' pension and provident funds.
According to CPF Financial Services Group, the administrators of both schemes, counties had not remitted Sh12 billion to the Local Authorities Provident Fund (LapFund) as at September 30 2017. The devolved units had also not remitted Sh18 billion to the Local Authorities Pensions Trust (Laptrust), according to an earlier report by CPF Group.
“We had earlier revealed that county governments have not remitted Sh18 billion to Laptrust. We can also now confirm that the same administrations have not remitted another Sh12 billion to LapFund,” said the administrator's chief executive officer, Hosea Kili.
LapFund is a defined contribution retirement benefits scheme catering for all employees of county governments, urban areas, cities, and towns (formerly local authorities) and associated institutions, including all members of the county assembly (MCAs).
Members contribute 12 per cent to the fund while the sponsor, which is the county government, contributes 15 per cent of the member’s gross salary.
Gross salary
The fund enjoys a membership of over 25,700 and it is valued at Sh28 billion.
LapTrust has a membership of 28,000 and is valued at Sh43 billion.
However, Mr Kili downplayed speculation that both Laptrust and Lapfund were under threat from the ballooning public debt and also poured cold water on claims that pensioners were at risk of losing their savings.
“The issue of debt is a cross-cutting issue in most public sector pension schemes due to non-remittance of deductions or late remittances, which attracts a penalty of not more than three per cent, as prescribed under Section 53a (3) of the RBA Regulations,” said Kili.
He also explained that in defined benefit schemes such as Laptrust, employees are guaranteed their retirement benefits and, therefore, there is no risk to the member. The risk, said Mr Kili, is wholly borne by the Government, which legally stands as its sponsor.
“Members are assured of receiving the promised benefit on retirement,” he said.
He also pointed out that, according to the LapTrust trustees report presented at the 2017 AGM, the scheme is well funded and has adequate resources to meet members' benefits as they fall due, owing to its rich investment portfolio.
“The scheme has solid investments in high-value properties to its name in the Nairobi CBD such as Loita House (Pension Towers), CPF House, Metro Park, and Langata Shopping Centre re-development project (The Freedom Heights Mall and Residence), among many others across all major cities and towns in Kenya. These properties make up only about 39 per cent of the scheme portfolio,” said Kili.
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