Former employees of Standard Chartered Bank Kenya have won a decades-long case after a tribunal ordered the lender’s retirement benefits scheme to recalculate their benefits after ruling that their amounts were reduced as a result of using wrong actuarial factors.
The Retirement Benefits Appeals Tribunal agreed with the 629 retired employees that the bank’s pension fund used the wrong procedure in calculating their terminal dues, which resulted in reduced dues.
The tribunal said the pensioners had a legitimate expectation that the calculation of their benefits would be done on the basis of documents supplied by the bank to the scheme and not the new reduced actuarial factors, which was applied.
“While this tribunal does not find that there was fraudulent misrepresentation, this tribunal is persuaded that there was misrepresentation, concealment and non-disclosure of actuarial factors the scheme intended to use in the calculation of the appellants’ benefits from those provided to the appellants at the time material to the dispute,”
The tribunal further directed the lender to refund Sh1.1 billion, which was transferred from the scheme to the bank in the year 2000, which the pensioners argued that it ended up altering their benefits and rights
The tribunal noted that from the programme of early retirement introduced by the bank in 1999, the retirees who left their jobs at 50 years were entitled to their commuted lump sums and pension immediately and all those who retired below 50 years were entitled to commuted lump sums immediately and their pension would be deferred until they were 50 years.
The tribunal also said house allowance, and cost of living adjustments among other benefits ought to have been factored in the calculations as per deed and rules.
“The upshot of the foregoing is that this tribunal finds that the appellants have proved that the transfer of the surplus to the bank was not done within the confines of the governing laws and trust deed rules,” the tribunal chaired by Muthoni Gichohi said.
The pensioners sued their former employer and the Standard Chartered Bank Kenya Pension Fund accusing them of reducing their lump sum payment by using incorrect actuarial factors in computing cash values for both the deferred pensioners and commuted values for immediate pensioners.
They sued the bank and the scheme saying it should be compelled to pay Sh9 billion as balance of lump sum pension benefits and interest plus a refund of Sh1.1 billion to the fund and paid together with interest totaling to Sh5.79 billion.
Stanchart said it created a new defined scheme in 1999 as a section of the Trust Fund established in 1975, which absorbed all existing employees leaving those who had already retired with the old terms and conditions. In 2006, the lender separated the schemes with the agreement of all the eligible employees.
