County pension fund sets aside Sh2bn for defaults

What you need to know:

The trustees of the giant scheme say in the report that the provisions wiped out Sh1.48 billion additional wealth that was created in the year under review.
The growth in assets to Sh23.90 billion in December 2016 from Sh22.42 billion a year earlier was helped by fair value gains on investments and additions to investment property.
Laptrust was owed Sh18.6 billion by counties of Nairobi and Mombasa as well as the Nairobi City Water & Sewerage Company (NC&SC).

Local Authorities Pension Trust (Laptrust) was forced to set aside nearly Sh2.23 billion to cover for outstanding remittances from the counties and the aborted 2016 Chase Bank bond, its annual financial report shows.

This was on top of the Sh3.17 billion the umbrella county pension fund provided against doubtful receivables in 2015, which included Sh66.7 million deposits in the collapsed Imperial Bank.

The trustees of the giant scheme say in the report that the provisions wiped out Sh1.48 billion additional wealth that was created in the year under review.

The growth in assets to Sh23.90 billion in December 2016 from Sh22.42 billion a year earlier was helped by fair value gains on investments and additions to investment property. Laptrust was owed Sh18.6 billion by counties of Nairobi and Mombasa as well as the Nairobi City Water & Sewerage Company (NC&SC) in outstanding pension remittances and accrued interest at the rate of 1.25 per cent per month by end of September.

This was a growth of Sh4.2 billion from Sh14.42 billion in December 2016, the scheme’s annual general meeting (AGM) heard on Friday. The share of delayed remittances and accrued interest was largest for Nairobi County at Sh10.71 billion in December 2016. This was an increase of Sh6.53 billion compared to Sh4.18 billion that was inherited from the defunct Nairobi City Council in April 2013.

Mombasa County arrears had grown by Sh668.87 million from Sh1.15 billion in April 2013, while Nairobi Water owed the scheme Sh1.89 billion at end of 2016.

Laptrust’s net returns on investment in the period to December 2016 nearly doubled, rising 98.46 per cent to Sh1.43 billion compared to 2015. This was largely on drop in fair value loss arising from revaluation of assets to Sh97.12 million from Sh1.27 billion a year earlier.

“The major challenge is the issue of liabilities held by former local authorities which have been taken over by the county governments,” chief executive of CPF Financial Services, the scheme’s administrator, Hosea Kili, told reporters on the sidelines of the AGM.