County workers inch closer to an umbrella pension scheme

Employees working at the 47 counties inched closer to having an umbrella pension scheme after MPs passed a government sponsored bill through its second reading.

The MPs approved the County Pension Scheme Bill 2018, which is one step to becoming law. Once the President signs it, it will obligate county governments’ members of staff to join the new umbrella scheme.

Leader of Majority Aden Duale who initiated debate on the bill said the proposed scheme provides better benefits for county employees.

“The fund managers will not use pension of workers in an investment that will not bring required returns for members’ contributions,” Mr Duale said.

The bill lowers the minimum deduction from employee pay from the current 12 per cent to 7.5 per cent.

Counties have been remitting at a rate of 15 per cent for every employee and will keep doing so at the same rate under the new scheme.

The bill proposes that county governments that fail to remit employee deductions by the 10th day of every month should be compelled to pay interest.

“All unpaid contribution and interest there on shall constitute a civil debt that will be recovered through instruments of the law,” the bill reads.

It also makes it mandatory for all employees to contribute to the scheme that will replace all others associated with county governments.

“The county government shall take out and maintain a life insurance policy that has disability benefits in favour of every member of the scheme, for a minimum of three times of the member's annual pensionable emoluments,” the bill states highlighting one of the benefits the county staff will receive.

Contributing to the debate, the Finance committee chairman Mr Joseph Limo said whereas the bill proposes to transition LapTrust and LapFund (the current schemes) into one fund, there were concerns on what happens to assets and liabilities of the old scheme.

“There are a lot of unremitted deductions to the tune of Sh20 billion from the county governments and defunct local authorities.

The new scheme will not inherit liabilities of the existing schemes. This new scheme will start on a clean slate and members in old schemes will have option to join,” Mr Limo said.