County government workers are differing with governors over the form and structure of a proposed pension scheme.
The governors had proposed collapsing the administrative services of the Local Authorities Pension Trust (Laptrust) and the Local Authorities Provident Fund (Lapfund) into the Laptrust (Umbrella) Retirement Fund.
According to the governors’ proposal, the new body will offer retirement benefits to all county government staff.
“The Council of Governors on May 14 endorsed the Laptrust (Umbrella) Retirement Fund (currently processing change of name to the County Pension Fund), that currently caters for various sponsors, as the scheme of choice to offer retirement benefits to members, officers and staff of county governments in line with the provisions of Section 132 of the County Governments Act,” CoG chair Isaac Ruto (Bomet) said in a June 16 circular to all counties.
Laptrust was originally set up to cater for the senior cadre of local authorities staff while Lapfund was to accommodate the rest of the staff. But with the liberalisation of the market in 2006, members were free to join their preferred scheme.
But the CoG directive is causing jitters among county staff, who fear that the proposed merger could sink their hard-earned savings.
At stake is about Sh20 billion a year which the more than 100,000 county government employees contribute in retirement savings. The figure includes contributions of over 70,000 staff seconded from the national government and from the 32,000 defunct local authorities, as well as the newly recruited county workers.
“The problem we have is with how governors arrived at the formation of the umbrella body without the consent of the members. Our proposal remains that current county staff remain with the pension schemes as they were before, but newly recruited staff can join the proposed County Pension Fund,” Mr Alex Kirui, the national vice-chair of the Kenya County Government Workers Union (KCGWU) said.
Union officials also said the governors had overstepped their mandate by purporting to dissolve Lapfund – which is a parasatatal created by an Act of Parliament – and merging its functions with Laptrust through a circular. Laptrust, on the other hand, was created by a legal notice, and its directorship remains fuzzy.
Laptrust boss Hosea Kili, however, told Sunday Nation that suggestions that governors lack such power were misplaced.
“The Council of Governors has the mandate to make executive decisions,” he said.
According to Ms Mary Murongoro, KCGWU chair, even if there were to be a merger, which the union is not opposed to per se, it should go through Parliament to enact the requisite law to protect county workers and pensioners.
“The proposed merger should not create a liability to either fund,” she said.
Western Kenya regional KCGWU secretary Juvenalis Orao also alleged that Laptrust in its current form is more of a private entity, which is not open to scrutiny by the Auditor-General, while Lapfund is a parastatal whose accounts are open to public scrutiny.
“Laptrust management is shrouded in so much secrecy and they need to place their books on the table for members so that we can talk to an entity whose operations we understand,” said Mr Orao.
This was in reference to Laptrust’s books of accounts, which were published in the dailies on July 16 as being audited by Deloitte and Touche instead of the Kenya National Audit Office.
“The Laptrust board of trustees selected Deloitte and Touche from a list of certified public auditors approved by the Auditor General. We are not the only public institution not being audited by the Auditor-General. The Kenya National Audit Office is allowed by law to appoint private firms to carry out the exercise on their behalf,” said Mr Kili.
Laptrust has also been having a running conflict with the State Law Office, which questioned its alleged conversion to company from its predecessor, Kenya Local Government Officers Superannuation Fund. In the letter of December 12, 2013, the AG argued that “the conversion of the Kenya Local Government Officers Superannuation Fund to a company limited by guarantee was improper.”
Mr Muigai further stated that “it may be safely concluded that the assets of Laptrust were improperly vested in the Laptrust Retirement Services Limited”.
“Perhaps due to being overwhelmed by work, the AG’s office may have misinterpreted it that the scheme was converting to a company,” said Mr Kili.
RBA’s wrote to Laptrust on June 4 threatening to deregister for allowing its managing trustee to also run the administrative services. The two functions are by law required to be run separately to safeguard members’ contributions.
In addition, RBA accused Laptrust of registering Laptrust Administration Services as a private company which is trading with the fund without proper procurement procedures, and stated that the scheme was “ineligible to manage any retirement benefits scheme under the Retirements Benefits Authority Act.”
