Trouble brewing in counties over proposed pension scheme

The battle over the control and management of pension contributions by county government employees has taken a new direction with the workers differing with Council of Governors over a proposed pension scheme.

The Standard has established that over 30 County Assembly Boards and 10 County Public Service Boards have entered into an agreement with Local Authorities Pension Fund (Lapfund).

Kericho, Homa Bay, Kilifi, West Pokot, Bungoma, Nyamira, Samburu and Siaya County Public Service Boards confirmed the new arrangement had been met, plunging the pension scheme plan for county workers into further confusion.

In June, the Council of Governors wrote to the County Public Service Boards approving Laptrust (Umbrella) Retirement Fund, now referred to as the County Pension Fund (CPF), to offer retirement benefits to County governments staff.

The Council's Chairman, Isaac Ruto, through a circular said the move was in line with the provisions of Section 132 of the County Governments Act 17 of 2012. However, analysts say the Council of Governors might have exercised the powers they wish to have, for such responsibilities lie with individual counties and their service boards.

CPF Managing Director Hosea Kili said his organisation had laid sufficient groundwork in providing pension services to County governments.

Mr Kili observed that the allegations from the Attorney General that Laptrust's assets were illegally vested in a private outfit were due to misinformation.

"We are operating in accordance with the laws," he said, adding: "We are gradually shifting from relying on administration services to generating more income from training and digitisation of data."

Going forward, Kili called for the merger of administration services of the two schemes. Underneath these suggestion, however, is the complex existence of CPF and the actuarial deficits the two schemes face.

As at December 31, 2012, Lapfund had no actuarial deficit but had Sh3.5 billion in unremitted contributions while Laptrust had Sh1.9 billion actuarial deficit. Total liabilities owed to Laptrust during the same period amounted to Sh6 billion.

Lapfund Chief Executive Officer David Koross confirmed his entity had inked deals with some counties, but would not disclose names, adding, "We will be signing more bilateral agreements soon. Our goal is to ensure workers' interests and retirement savings are given a priority."