The regulator has put Postal Corporation of Kenya Staff Retirement Benefit Scheme (KRSBS) under administration after it failed to collect Sh1 billion retirement benefits dues from Postal Corporation of Kenya (PCK).
The move by the Retirement Benefits Authority (RBA) effectively disbands the scheme’s board pending appointment of an administrator within a month.
In a letter dated July 29 and signed by RBA chief executive Nzomo Mutuku, the pension scheme had not received Sh203 million from PCK by May 2016, with the debt now standing at Sh1 billion inclusive of interest.
“The rate of increase of the deficit in the scheme is unmanageable and is unlikely to be cleared within a reasonable time period,” said Mr Mutuku in the letter addressed to PCK chief executive Dan Kagwe.
“The authority shall initiate the process of appointment of an interim administrator. The role of the administrator is well stipulated in section 45 (5) of the Retirement Benefits Act.”
The directive also stopped further collection of any deductions from employees’ emoluments and ordered that all members of the scheme be notified of the cessation.
RBA said it had negotiated for an amicable solution to the deductions’ impasse between PCK and the pensions scheme, but the remedial plan was not honoured which would have seen PCK allocate one of its properties to the scheme as payment for the dues.
The administrator is also expected to recover all debts owed as well as evaluate the financial soundness of the scheme and advise RBA accordingly.
RBA is putting the scheme under administration a few months after it said that cash-strapped firms can apply for suspension or discontinuation of employer-retirement contributions to pension schemes until the coronavirus pandemic eases.
RBA, however, said companies that have filed winding up notice will bear full costs of employee and employer pension obligations.