Support pension schemes for decent retirement for all

A concept of saving culture for retirement. [Getty Images]

The news has been awash with stories of pension schemes struggling to meet their obligations on account of low revenues, despite owning prime properties.

This calls for urgent measures to keep the schemes self-sustaining and guarantee decent retirement for members. At the heart of this revenue generation crisis facing these quasi-public pension schemes is myriad issues including low rent collection and challenges in disposing off assets, thus impacting their liquidity.

As a result, the schemes are unable to honour payment of members' benefits from these properties vested to them. It is unfortunate that some schemes saddled with properties are having to navigate financial crises while engaging in protracted legal battles with tenants occupying their properties yet refuse to pay rent or move out, and in some instances have proceeded to alienate these properties to third parties.

In some cases, a pension scheme is unable to get its sponsors to inject fresh cash to offset any deficits or when they delay remitting pension dues. This may render pension schemes unable to make their monthly pension payments to their members. These schemes need support of the requisite state actors to thrive and meet their obligations to members.

TelPosta Pension Scheme (TPS) main purpose remains provision and custody of pension and other retirement benefits for former staff of the now defunct Kenya Posts and Telecommunications Corporation (KPTC). It is a closed scheme that does not receive contributions from its members. Following the split of KPTC, TPS was vested with various real estate properties. The scheme's trustees are therefore expected to generate funding to remit monthly pension dues and other retirement benefits to its members from leasing and selling these properties.

Pension assures members of a fixed payment, for life, once they retire. Within the retirement benefits ecosystem, there are five desirable outcomes of a successful pension system: sustainability, adequacy, coverage, security, and efficiency.

Sustainability is every pensioner's minimal expectation of their schemes. A sustainable pension scheme can meet its financing obligations without imposing any undue burden on government, scheme sponsor, or its members.

Pension schemes need support to better commercialise their assets through strategic disposal of some real estate, ensuring that they also comply with regulation that requires schemes to liquidate their real estate portfolios to below 30 per cent. This will enable the schemes make improvements on some of their existing properties.

The writer is the Administrator of the TelPosta Pension Scheme