Counties win Sh60bn pensions war with State


A past function by the County Pensions Fund. FILE PHOTO | NMG

Counties have successfully wrested the Sh60 billion pension fund from the national government in court, in a major relief to employees of the devolved units.

A judge declared the County Governments Retirement Scheme Act enacted in 2019 unconstitutional, which had allowed the national government to control the billions of shillings.

The Act lacks public participation and conflicts with other Articles of the supreme law, Employment and Labour Relations judge Maureen Onyango ruled. It was also conflicting with several laws, including the County Government Act and the Urban and Cities Act, the Retirement Benefits Act and the Employment Act.

“For these reasons, I agree with the petitioners that the decision of the government to get involved in the management of pensions for county government employees is a violation of not only the Fourth Schedule to the Constitution but also Article 6 of the Constitution which provides that the government at the national and county levels are distinct and interdependent and shall conduct their mutual relations on the basis of consultation and co-operation,” the judge said.

There is no doubt that the County Governments Retirement Scheme Act establishes the pension scheme as a State corporation under the supervision of the Treasury.

The law was first opposed by the Local Authorities Pension Trust (LapTrust) and County Pensions Fund (CPF), arguing that it was wrong to bring the financial services under the control of the Treasury.

Kenya County Government Workers Union and Busia Senator Okiya Omtatah also challenged the Act, saying the government was subjectively seeking to transfer its members from a superior scheme to an inferior one without consent.

LapTrust has more than 9,200 pensioners and 19,680 members.

The fund was originally set up to cater to the senior cadre of local authorities staff while Lapfund was to accommodate the rest. But with the liberalisation of the market in 2006, members were free to join their preferred scheme.

Justice Onyango agreed with the petitioners that by regulating pensions for county government employees, the national government sought to enter into the realm of regulating terms of service of employees of county governments.

Section 24 of the Act provided for contributions by both the employee (12 percent) and employer (15 percent) of pensionable emoluments.

The court said there was no public participation before the Act was enacted. The judge was told the Senate gave stakeholders two days that fell on a weekend to study the Bill.

Former Treasury Principal Secretary Julius Muia defended the law, saying there were proposals since 2006 to merge Laptrust and Lapfund.

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