Pension arrears have risen 10 times to Sh65.7b since devolution, counties workers tell Senate

Counties owe pension schemes Sh65.7 billion out of which Local Authorities Provident Fund (Lapfund) is owed Sh31.37 billion and Local Authorities Pensions Trust (Laptrust) Sh34.33 billion. [iStockphoto]

Pension arrears have increased 10 times since the inception of devolution in 2013.

Kenya County Government Workers Union Secretary General Roba Duba on Tuesday told the Senate that the union was recommending evaluation of County Governments Act and other regulations to ensure individual responsibility and stiff punishment for officials who fail to remit statutory deductions on time.

Duba revealed that counties owe the pension schemes Sh65.7 billion out of which Local Authorities Provident Fund (Lapfund) is owed Sh31.37 billion and Local Authorities Pensions Trust (Laptrust) Sh34.33 billion.

"Nairobi City County leads the counties in terms of amounts owed as debts total outstanding dues owed to the two pension schemes stand at Sh39.66 billion with Sh15 billion (Lapfund) and Sh24.62 billion (Laptrust) while Mombasa owes Sh9.43 billion, Garissa Sh1.83 billion and Migori Sh1.73 billion respectively," said Duba.

The Senate County Public Investments and Special Funds Committee heard that there were no proper enforcement mechanisms.

Duba said debts inherited from the local authority councils were manageable as there were regulations in place, citing the Local Authority Transfer Fund regulations of 1998.

"The Transitional Authority recommended to the newly formed devolved units the option of transferring property to the pension schemes and other statutory deductions as part of the settlement of the existing pension debts, but they vehemently opposed the proposition," said Duba.

According to the workers, some pension schemes have been rocked with poor mismanagement of their contributions and benefits, and that although there have been regulations and mechanisms to compel counties to remit the deductions, pension schemes have not explored the options.

The union is proposing a parliamentary legislation to empower the National Treasury to disburse funds directly to the statutory institution while the Office of the Controller of Budget enables the office holder to rein in counties to ensure compliance with the remittance of statutory deductions.

Duba told the committee, chaired by Vihiga Senator Godfrey Osotsi, that they had received complaints from members who cannot access their pension upon their retirement.

"Failure to remit pension dues on time has critically affected employees upon their retirement as most pension schemes only pay the pension remitted to their accounts by the employers leaving the retirees with a difficult task of following up on the balance with their employers for long," he said.

He cautioned that if the trend is left unchecked, workers might lose their entire savings.