The High Court has ordered the Retirement Benefits Authority (RBA) to determine a dispute of non-payment of pension dues filed by former employees of collapsed ARM Cement.
In a judgement on December 15, Justice John Chigiti gave RBA 45 days to determine the dispute, stating that it was wrong for the authority to ignore the complaint by the former workers of the cement manufacturer for the past three years.
The 120 retirees filed the complaint on September 11, 2020, and RBA claimed that it could not act on it as the pensioners were seeking a judgment against ARM, which was beyond its mandate.
“This is a clear case of a failure to act fairly on the part of the decision-making authority. The applicants have established a case of procedural impropriety and I so hold,” said the judge.
Justice Chigiti added that the RBA did not inform the retirees that it would not hear the case, but casually assumed they were satisfied with a response it gave to them in 2020.
“A statutory institution like the 1st respondent that deals with fragile members of our society must be better when it comes to the promotion of social justice under Article 43 of the Constitution,” added the judge.
The former employees sued RBA and Zamara Fanaka Retirement Fund (Pension Scheme), formerly Alexander Forbes Financial Services East Africa Ltd. They said they were former employees of ARM Cement and members of Zamara Fanaka Retirement Fund, which managed their contributions.
The retirees filed a complaint with RBA over the non-payment of their pension benefits by the trustees of the scheme.
However, three years later, RBA had not determined the matter without justifiable reason, yet it is statutorily mandated to determine such complaints within six months.
RBA said it responded to the request on September 7, 2020, and sought a response from the scheme on the issues raised by the pensioners. RBA was of the opinion that the retirees were seeking a judgment against the scheme, an application that was not within its mandate.
The Authority said the retirees should have presented a proper complaint and invoked its mandate, to enable it to deal with the matter.
The court also heard that due to financial constraints, ARM failed to remit the contributions to the scheme.
The company was placed under administration from August 17, 2018, and under section 560 of the Insolvency Act, a moratorium was placed on all legal proceedings including enforcement actions against the company.
The court heard that all outstanding debts were to be settled in accordance with the joint administration plan, as approved by the administrators and as such, RBA could not enforce the same.
The court was informed that upon being served with the response, the retirees appeared satisfied as they did not raise any issues.
The judge heard that the contributions were irregular since the company was placed under administration, and the fund manager said it administered the funds transparently and kept its members updated.
In a letter on May 14, 2019, Zamara demanded from the company an outstanding contribution of Sh16.4 million and because of the moratorium, the fund could not institute legal action against the company.
The company allegedly confirmed on July 3, 2019, the outstanding pension contributions had been recorded as an unsecured claim.
And from the efforts made by the fund, the company remitted three payments from January to March 2019.
However, a report by joint liquidators of ARM Cement made in January 2023, allegedly recommended the liquidators to continue pursuing an orderly winding up of the affairs of the company.
