A section of Muthurwa Estate that is owned by the Kenya Railways Staff Retirement Benefit Scheme in 2016.
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How windy tenancy court fights have left pension schemes on the edge
A recent report by Allianz, an international financial services provider, ranked Kenya’s retirees among the poorest globally.
The 2023 Allianz global pension report noted that Kenya’s pension system does not provide an adequate standard of living in old age, leaving most of those aged 65 years and above in poverty compared to their peers in other countries.
The report stated the poorest pensioners can be found in Kenya, Lebanon, and South Africa, where the gross benefit level is merely 15 percent.
What is puzzling, however, is that most of the more than 1,200 retirement pension schemes in Kenya are not self-sustaining yet they have properties across the country that should otherwise assist them improve the living standards of their members.
Endless court fights by tenants occupying properties by the pension schemes mean the firms are unable to liquidate their real estate portfolios to below 30 percent as per the law and pay the monthly dues to their members even as the value of the assets continue to depreciate.
A peek into the court registries reveals that most of the biggest pension schemes, including Kenya Railways Staff Retirement Benefits Scheme, Teleposta Pension Scheme, Local Authorities Pension Trust (Laptrust), and Local Authorities Provident Fund (Lapfund) among have cases pending in court for many years.
Most of the cases were either filed by members seeking to stop the schemes from disposing of some properties, which would have enabled them to make monthly remittances to its members.
Other cases include orders obtained by members blocking their eviction from houses they have been residing in for a long time or stopping plans to improve the dilapidated property.
174 retirees
In August last year, Employment and Labour Relations court judge Maureen Onyango blocked the eviction of former Kenya Railways employees, until the former employer pays them their full package they were promised when they retired in 1998.
The court ruled that the former employer still owes the 174 retirees because they were not paid their full package upon retirement in 1998 and those still living in Nairobi should retain the houses up to the time they are paid their dues.
“Based on the finding that the claimants did not receive their terminal dues calculated on the full percentage of the salary increment, I find that they are entitled to the remainder of their terminal dues,” the judge said.
The court directed KRC to tabulate their pay, based on their last pay, and file a report in court within 30 days from the date of the judgment, for the final decision on what is due to them.
The judge said the amount should be computed on their salary based on the 70 percent and 45 percent increment, for the bottom and top bracket employees respectively, as stated in the agreement signed in 1997.
The former employees led by George Ochieng Ododa had sued KRC together with the Scheme demanding their retirement package and terminal dues as provided in a CBA signed in 1997. The houses belonged to the employer but they were transferred to the scheme in 2006.
The scheme has rental houses on Ngong Road, Upper Hill, Muthurwa, Ngara, and Makongeni estates in Nairobi but it has been struggling with rent collection as some of the tenants move to court.
The scheme with more than 8,000 retirees has also been struggling to pay monthly dues to retirees and has at the same time lost investments such as land that it was controlling in major towns.
In 2020, the government acquired the scheme’s 18-acre parcel of land adjacent to Uhuru Park for Sh7.9 billion to set up a bus terminus dubbed Green Park. Pensioners are still waiting to be compensated fully.
In 2021, Mariakani Estate Welfare Association tussled in court over where to channel their monthly rent, after Nairobi Metropolitan Services (NMS) came onto the scene.
In a ruling, Justice Said Chitembwe directed in September 2021 the tenants to pay their rent to Lapfund, pending the determination of the case.
“The first defendant (Lapfund) cannot fulfil its obligation to pay pension to retired members of the Nairobi City Council without receiving income from its properties,” the judge said.
The tenants moved to court seeking to stop the scheme and NMS or their agents from instituting any actions aimed at levying distress of rent against the residents, pending the determination of their case.
Evidence presented in court showed that the property originally belonged to the Nairobi City Council before it was transferred to Lapfund in 2018.
Trouble started when NMS mandated the Kenya Revenue Authority to collect the rent, which move the tenants said was surprising, yet they had been remitting their payments to the scheme.
The association members submitted that the mix-up as to who should collect the rent from the residents jeopardises their right to quiet and peaceful possession of the property.
Eviction of tenants
The court heard that the entire estate is on the verge of dissolution and eviction of the tenants because of a lack of clarification on who should receive rent for the legal owner of the estate.
Some of the tenants said they had lived in the estate for more than five decades since they were born.
In November last year, the Court of Appeal dismissed an application by former employees of Telkom Kenya and Postal Corporation of Kenya, who belong to Teleposta Pension Scheme Registered Trustees from disposing of several houses, which were condemned in 2008 and were, therefore, set for demolition.
The 124 former employees wanted the properties to be sold to them saying they had been occupying the houses by their employment.
They told the court that they were allocated the properties through allotment letters and they were to be given priority to buy. They argued that the housing allowances that were due to them were deducted as rent on account of their occupation of the houses as they negotiated for the purchase of the houses.
The trial court, however, dismissed their claim, forcing them to move to the Court of Appeal for a stay of the decision.
Justices Hannah Okwengu, Asike Makhandia, and Kathurima M’Inoti dismissed the application saying, “In the instant application, we doubt whether the applicants were entitled to any legitimate expectation, more so by insisting to stay in houses that were condemned as unfit for human habitation.”
A few years ago, High Court judge Hatari Waweru dismissed an application by several people seeking to block their eviction from houses belonging to the Teleposta Scheme, saying the court cannot be the refuge of a tenant who fails to meet his principal obligation of paying rent as and when it becomes due.
“He who comes to equity must come with clean hands. A tenant who is in huge arrears of rent is undeserving of the court’s discretion,” Justice Waweru said.
