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State, Council of Governors clash on county pension plan

Thursday, August 12th, 2021 00:00 |
Council of Governors members led by their chairman Martin Wambora during a past press briefing in Nairobi. Photo/PD/FILE

Council of Governors (CoG) yesterday protested an attempt by the National government to seize control of more than Sh60 billion pension fund for county workers.

The governors’ concerns come after the National government unprocedurally and irregularly classified pension schemes for all civil servants, including Laptrust and County Pension Fund (CPF) that handles county workers, as state corporations.

The listing puts the two schemes under the control of the broke National Treasury that has been raiding state corporations of ‘surpluses’ to finance the budget.

By the end of the second quarter of the financial year 2020/21, Treasury had managed to collect more than Sh100 billion from regulatory authorities as the broke government engages an overdrive gear to raid the coffers of State entities to fund its programmes.

“At risk is Sh60 billion of the steadily growing pension funds belonging to employees of county governments,” Laikipia governor Ndiritu Muriithi, who chairs CoG’s Finance committee, said even as he accused the state of “always stretching its mandate whenever huge money is involved”.

This will be the second time, devolved units will be attempting to thwart almost a similar scheme when they opposed a bill that gave the national government power to manage county employees’ retirement benefits, which is against the Constitution.

The Government’s Retirement Scheme Bill, 2018 gave county governments a peripheral role in the management of the pension scheme, while allowing the national government to take control.

A letter dated July 16, 2021 by Head of Public Service Joseph Kinyua says the government declared Laptrust and CPF as state schemes following a legal advisory by Attorney General Kihara Kariuki.

“This follows the legal opinion of the Attorney General that affirms that all pension and provident funds are public entities,” Kinyua said.

He directed Treasury to bring Laptrust and all its affiliate/subsidiary entities to compliance with the PFM Act, PPAD Act and the Public Audit Act.

The letter was addressed to Treasury Cabinet Secretary Ukur Yatani, his Devolution counterpart Eugene Wamalwa and State Corporations Advisory Committee secretary Wanjiku Wakogi.

Related entities

Of concern, according to the letter, the schemes are required to submit their budgets and comply with the Treasury’s guidelines on bank accounts, surpluses, borrowings and expenditure.

“The National Treasury to ensure that a special audit by the Kenya National Audit Office (KENAO) for the purposes of ascertaining current financial position of Laptrust and affiliate/subsidiary entities and guiding on future,” Kinyua said.

In a letter to Kinyua dated August 9 and copied to Yatani, CoG boss Martin Wambora (Embu) faulted the classification of the pension schemes as state corporations.

“You will note that the Laptrust scheme, CPF and related entities are not state corporations within the meaning assigned to it under the State Corporations Act, cap 446,” Wambora said.

“The Laptrust DB scheme, the county pension fund and related entities are except entities under Section 2 of the State Corporations Act since they are unincorporated and fall under the Local Government Act and the national government does not hold any shareholding in the two schemes,” he added.

Wambora said that Laptrust Scheme was established under the Local Governments Act, which transitioned to the County Government Act, 2012.

CPF, on the other hand, was established in 2011 and earmarked by the National Treasury as a scheme for county government employees

“We, therefore, wish to firmly caution against any form of interference in the running and management of pension schemes for county governments or any other scheme for that matter.

“Finally, we strongly object to the continued interference with devolved functions, such as your directives on pensions for county employees.

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