A new law meant to streamline pension services for county government staff is at the centre of a row pitting trade unions, governors, the national government and existing schemes in a battle to control billions of workers’ retirement funds.
President Uhuru Kenyatta assented to the County Government Retirement Scheme Act, 2019, on September 18 and the new law took effect on October 7, with its key provision being to create a new entity by merging existing ones.
The schemes to be collapsed to create the County Governments Retirement Scheme (CGRS), are the Local Authorities Provident Fund (Lap Fund), Local Authorities Pension Trust (Lap Trust), Local Authorities Pension Trust (Defined Benefits) Scheme, and the Local Authorities Pension Trust (Umbrella) Retirement Fund.
There is a transition period of five years, during which time the existing schemes will not be allowed to admit new members but will continue paying pensions and benefits to existing ones.
With the 47 counties having almost 180,000 workers, according to the latest Economic Survey 2019, the CGRS will control vast amounts of resources, making it almost as large in size as the giant National Social Security Fund (NSSF).
This could explain the reason there is a push and pull in efforts to control the new entity. In the same Economic Survey 2019, the wage bill for the 47 counties stood at Sh126.3 billion, only second to the Teachers Service Commission (TSC), which spent Sh202.2 billion to pay teachers.
“Both the national and CoG are salivating on the wings. The governors are for the first time realising there is ‘free money’ they can take control of. Our position is to deprive both of any chance to have a say in the management of the new scheme,” Kenya County Government Workers Union (KCGWU) general secretary, Roba Duba told the Sunday Nation.
The vicious battle recently played out when Lap Fund announced a change of name to County Governments Retirement Scheme on October 23.
This attracted the wrath of governors who saw the Lap Fund’s move as an attempt to jump the gun.
On November 1, the Council of Governors (CoG) took a full-page advert to condemn Lap Fund’s change of name to one similar to the entity envisaged by the County Government Retirement Scheme Act.
“The Council of Governors notes with utmost concern the publication in both the Daily Nation and the Standard newspapers made on October 23, 2019, to the effect that ‘Lap Fund is now County Governments Retirement Scheme (CGRS),” CoG chairman, Kakamega Governor Wycliffe Oparanya stated.
“We wish to notify all county governments, their employees and the general public that the advertisement is mischievous and is calculated to misrepresent facts,” the CoG chairman added.
But KCGWU dismissed CoG as “busybodies”.
On the one hand, CoG wants to have the County Pension Fund (CPF), a private entity not subject to auditing by the Auditor General, retained as the scheme for county employees.
The governors prefer a corporate administrator with CPF Financial Services, headed by Hosea Kili, ranking high up as their ideal choice.
The CGRS Act however provides for an individual administrator appointed by the new scheme’s board of trustees.