Governors remain firm on new umbrella pension scheme

The Council of Governors (CoG) denied claims that it went against its own technical committee’s report in endorsing County Pension Fund (CPF), formerly Laptrust, as an umbrella pension for county workers.

After The Standard reported that the county chiefs ignored the committee’s report, the council, in a paid-up advert in local dailies, defended itself saying it was guided by the County Governments Act.

The county chiefs dismissed concerns raised by the Transition Authority and stuck to their guns, ordering the County Public Service Boards and advising the County Assembly Boards to implement the decision.

The statement co-signed by council Chairman Isaac Ruto and Kisii Governor James Ongwae who chairs the Human Resource and Social Welfare Committee, said their directive will only affect new employees while those already in the two existing schemes will choose between CPF and Laptrust

“Accordingly the CoG, on the 14th of May 2014, endorsed Laptrust (Umbrella) Retirement Fund (currently processing change of name to County Pension Fund), that currently caters for various sponsors, as the scheme of choice to offer retirement benefits in line with provisions of Section 135 of the County Governments Act,” the statement reaWWds.

An official of the Council of Governors Secretariat , Mr Antony Casese, yesterday explained the council was in the process of merging the administrative services of two exiting pension schemes – Lapfund and Laptrust – as per the team’s report, adding that they were bound by the law to pick an existing umbrella pension scheme.

In a circular dated June 16, 2014, the CoG informed all County Public Service Boards of their resolution to endorse Laptrust, which is currently rebranding into County Pension Fund, as the scheme of choice to offer retirement benefits to public servants at the devolved unit.

Isaac Ruto, in the circular, directed all chairs and secretaries of County Public Service Boards to implement the resolution immediately, citing the resolution of the council’s meeting held on May 14, 2014.

This is in spite of a technical team recommendation by the Presidential Task Force Committee chaired by Abdikadir Mohamed that Laptrust and Lapfund be merged to create CPF.

It is also not clear if Laptrust is a private or public scheme since its directors do not report to any ministry and its accounts are not inspected by the Auditor General.

There are also fears that governors want to bypass Parliament. Lapfund is a State Corporation and its status can only be changed by Parliament through a repeal or amendment of the law.

Yesterday, Mr Casese sought to clarify this position.

“We have not ignored the report since most of the recommendations are being implemented, an in any case their recommendations were not legally binding.”

He said CPF is a pension scheme registered under the Retirement Benefits Act and thus cannot be referred to as “private”. On the proposed merger of Laptrust and Lapfund, the Council of Governors says it will form a team to determine how to merge their administration.

Although the technical team recommended the marrying of Laptrust and Lapfund, Casese said Council of Governors was not in favour of this route since it would take too long as it would have to go through Parliament. The technical team chaired by David Nyakundi from RBA wanted Laptrust and Lapfund closed and their administrative services merged as per Article 96 of the Constitution.

Laptrust was established as the Kenya Local Government Officers Superannuation Fund under Legal Notice No 313 of 1963 to provide pensions to public officers of the defunct local authorities.

According to RBA, through an amendment of the legal notice, Laptrust through a resolution by trustees changed the name to LAPFUND Retirement Benefits, and entered the change of name on  April 1, 2011, at the Registrar of Companies.

“Regulation 16 of the Retirement Benefits (Occupational Retirements Benefits Scheme) regulation 2000 made under the RBA Act requires any amendments to the scheme rhules be communicated to the authority for approval. This change of name of the scheme was not communicated to the RBA,” the regulator’s board secretary Nyakundi B. D wrote to the AG on November 22.