CPF gets nod to launch civil service pensionsTuesday September 13 2022
CPF Financial Services is set to administer the Public Service Superannuation Fund after the Court of Appeal directed the fund’s board of trustees to honour a contract that had been awarded to the company within 30 days.
A bench of three judges ruled that while CPF had successfully bid for the civil service pensions contract, the board of trustees employed delaying tactics to deny it the tender. The tender was advertised in June last year and several firms submitted their bids.
CPF was the only bidder who managed to get to the financial proposals opening stage after attaining a technical score of 95.2 percent.
The fund administrator, however, accused the board of trustees of delaying the process to frustrate the conclusion of the matter. The matter was challenged before the Public Procurement and Administrative Review Board and later the High Court, where the PBARB was directed to complete the process.
The trustees opposed the case arguing that once the tender validity period expired, it could not be resuscitated. The tender period lapsed on January 11, 2022, according to the trustees.
“To bring finality in this matter, we are of the considered view that the interests of justice would be best served if we order, as we hereby do, that the appellant (Board of Trustees) do issue the 1st respondent (CPF) with the appropriate notification letter within 30 days from the date hereof,” Justices Daniel Musinga, Luka Kimaru and Ngenye Macharia said.
CPF Financial moved to court arguing that the due diligence conducted by the Board of Trustees created a legitimate expectation that it was the successful bidder and that it would receive the notification letter.
This did not happen as anticipated and no reasons for the delay were given necessitating the court case.
The judges said the Review board has the power to give directions to accounting officers of procuring entities with respect to anything to be done or redone in procurement or disposal proceedings.
“In our view, its power may even include the power to extend the validity of a tender in situations where an accounting officer for no good reason fails to adhere to statutory timelines or disobeys the Board’s directions so as to frustrate tenderers or bidders, even if the stated tender validity period has expired,” the court said.
In such a situation, the judges said the Board had the power to extend the tender validity period and even direct the appellant to award the tender.
The civil servants' pension scheme is expected to have at least 350,000 members contributing about Sh31 billion annually. NCBA, Stanbic and Co-operative Bank were identified as the fund’s custodian banks.
The Treasury rolled out the contributory pension scheme in January 2021 where public service workers contributed two per cent of their gross pay towards retirement savings in 2021, rising to five per cent in 2022 and 7.5 per cent thereafter.
The government contributes 15 per cent of the gross pay.