Former Absa workers cry foul over shrinking pension returns

Acting Managing Director Absa Bank Yusuf Omari during Absa Kenya Pros Sponsorship announcement ahead of the Magical Kenya Open tournament. [Jonah Onyango, Standard]

Former Absa Bank Kenya staff are accusing trustees of the Absa Staff Pension Fund of mismanaging the scheme and sidelining members.

The former employees, who worked for Barclays Bank Kenya before it became Absa, claim that beneficiaries of the Absa Staff Pension Fund have seen the value of their pension fall by half over the past 13 years.

“We are very unhappy over the trustees’ running and management of the pension scheme because there is a lot of misgovernance as far as the pension fund is concerned,” said Secretary of the Barclays Bank of Kenya Pensioners Association John Maina.

He said beneficiaries started reporting the dismal returns in 2016 when Absa Bank took over the running of Barclays Bank Kenya.

Data from the firm’s annual report indicates that the fund had over 1400 members as of 2021.

According to the pensioners, Absa Bank Kenya says the market has not been generating high returns and has signalled even lower returns this year, blaming it on the current economic slowdown.

Chairperson of the Pensioners Association Colleta Malinga said the pension trustees have ignored the members’ grievances and failed to take into account the effects of inflation on their savings.

“Sometimes we have met with the trustees, aired our grievances and given them time to answer us, but the responses have not been satisfactory,” said Ms Malinga.

“We are getting old, and we need to get some collective responsibility from them so that our sunset years can be better.”

They also accuse the bank of ignoring and denying them representation on the board, with the Bank appointing existing employees of the bank as trustees instead of selecting from the retired members.

The association is asking pension fund regulators, including the Retirement Benefits Authority (RBA) to step in and safeguard their benefits and interests.

“We are demanding that the RBA commission an audit of the fund,” said the lobby’s secretary Mr Maina.

“We are also asking that Absa increase our pensions because this is what most of us depend on and without an increase, inflation is making us poorer.

“After devoting years serving the bank, diligently setting aside their earnings for old age, we find it callous that the Absa Bank, a Pan African lender with a presence in 12 countries and a half-a-trillion balance sheet, find it costly to take care of our interests after we have retired,” he said. 

According to the firm’s annual report, the Scheme Trustees may, with the consent of Absa Bank, review pensions in payment and subject to there being sufficient funds, may increase pension payments as determined by the Actuary. 

The fund’s annual pension payout reported a 10 per cent drop from Sh520 million in 2020 to Sh466 million in 2021 with the firm citing inflation as a risk to expected benefits.