Workers who lose or change jobs will now be allowed to access their employers’ pension contribution after MPs Thursday annulled a legal amendment that had locked the savings until they reach 50 years.
The MPs said that National Treasury and the Retirement Benefits Authority (RBA) did not properly seek views of Kenyans before adopting the legal notice that effectively locked more than Sh385 billion in the pension pool.
They said that the legal changes had far-reaching implications and termed the public participation exercises conducted by Treasury and RBA as ‘mediocrity’.
Suspended Treasury Secretary Henry Rotich locked up the savings through Legal Notice 92. Observers said the move was meant to give the State access to long-term loans from the billions held by Kenyans in pension savings.
“The two are very important but our law is very clear that we comply with all constitutional requirements,” Kirinyaga Central MP John Wambugu said.
The move is a reprieve for Kenyans who risked not enjoying their savings until they hit 50 years.
Last month, industry regulator, warned that pension schemes risked incurring huge income loss if retrenched workers were allowed to access their employers’ contribution before attaining 50 years as had been recommended by the parliamentary Committee on Delegated Legislation.
“It is a sad moment for the retirement benefits industry as the parliamentary committee rejected our proposal to Treasury,” RBA chief executive Nzomo Mutuku said.
The agency maintained that Kenya was in low pension adequacy, blaming it on frequent access to the benefits by individuals before their retirement with 95 percent of individuals who leave employment taking out the maximum available under legislation in cash.