When Festus Langat joined the East African Post and Telecommunications Ltd in 1975 which later became Kenya Posts and Telecommunications Corporation as a young and strapping Post-Master, everything looked bright for him.
He had secured a good job with the government, something his peers envied him for. He was destined for a bright future. He never thought much about retirement, neither did he even consider losing his job through a redundancy. “My life was good. And I looked forward to building my career,” Langat says with bitterness.
Now, Langat is one in a long list of pensioners painfully sauntering between the corridors of the Retirement Benefits Authority (RBA) and the Retirements Benefits Appeals Tribunal with little hope of getting their pensions paid. Langat was dismissed from his job in 1997. He battled his employer for nine years and in 2006, current Chief Justice David Maraga, then a High Court Judge, ruled in his favour. Unfair dismissal The Kenya Posts and Telecommunications pension scheme, which by then had been restructured to Telposta Pension Scheme, was ordered to pay him damages that included his pension that had accumulated since his unfair dismissal. Yet, Langat has not been paid any penny to this day.
He is not the only former Telkom Kenya employee who has not been paid his pension. In 2007, Telkom Kenya was bought by France Telkom which renamed it Orange. It has since reverted to Telkom. The buyout led to a major rationalisation exercise with many Telkom Kenya employees losing their jobs. The employees filed a suit seeking to be paid their pension from the Telposta Pension Scheme.
The Scheme had hired the services of Alexander Forbes, a financial services and risk firm that has now rebranded to Zamara Group, as fund administrators. Zamara made a valuation determining how much the pensioners should be paid. The valuation according to the pensioner’s lawyer Titus Koceyo concluded that the pensioners should be paid Sh6 billion.
“We did not believe that valuation and sort our own independent valuation which concluded that the actual pay should have been Sh9 billion,” Koceyo explained. The pensioners took their case to RBA, which dismissed it. They appealed to the Appeals Tribunal which ruled that Zamara Group’s valuation was, in fact, wrong and faulted RBA’s initial ruling against the 311 pensioners.
Sadly, Koceyo says the pension trustees are yet to pay the Telposta Pension Scheme pensioners their dues since 2011, and many are suffering to this day. Such a case is not the only one that the pension tribunal has greatly faulted the rulings of RBA.
Most of them are often against pensioners and in support of funds that may have misappropriated pensioners’ cash. In 2010, Elias Maina Murugi, a former employee at National Bank of Kenya (NBK) went to the Retirements Benefits Appeals Tribunal seeking orders to compel NBK staff retirement benefits scheme to pay him his full emoluments amounting to Sh1,059,930. Mr Murugi was among 84 other employees retrenched by NBK.
The scheme had offered to pay him Sh473,638 after a valuation by Zamara. But Murugi protested, arguing that the amount was too little for the years he had served. He was joined in court by the other 83 former employees, who had all been paid amounts less than what they perceived the scheme to have owned them. Actuarial valuation Court documents show that NBK Pension Scheme hired Zamara Group that did an actuarial valuation.
“When the NBK pensioners came to our law firm, we took up the matter first with RBA just like normal procedure requires,” Koceyo says. “We hired a private actuary firm from South Africa to do the valuation since we did not trust the valuation done by Zamara which amounted to Sh36,039,829.
Our hired actuary put the real valuation to be Sh87,426,909, the pensioners were still owned a balance of Sh51,387,080.” When the pensioners took their case to RBA, the regulator, as usual, dismissed their plea and ruled in favour of NBK.
The pensioners appealed in the tribunal. On August 8, 2014, the Retirements Benefits Appeals Tribunal overturned RBA’s judgment and ruled that the pensioners be paid their full dues. “Alexander Forbes (now Zamara Group) should within 30 days from August 8, 2014 calculate and give to each of the pensioners or their beneficiaries a statement of account showing in detail how the benefits due are arrived at,” the tribunal said in its ruling.
Zamara was castigated by the tribunal for ‘not giving details of the investment income of the Scheme upon which interest may be calculated on the balance of each of the pensioner’s claim as required by the law.’ However, Zamara has defended itself saying that the valuation they have done for all the pension schemes they have administered is always calculated according to the rules of that particular scheme. “Each scheme is administered according to rules set by its members and the trustees. We are simply administrators.
The valuation that we do is done according to the laws of Kenya, and with utmost guidance from the rules of the scheme,” Zamara Chief Executive Officer Sundeep Raichura said in an interview with Financial Standard last week. Again, sadly the NBK pension scheme is yet to pay the pensioners their full dues to this date. Mr Koceyo, a pension law expert who has fought RBA many times at the tribunal says most pension fund managers dismiss pensioners as common people who should not have a say on how pensionfunds should be invested.
“Many take pensioners as a nuisance and a big disturbance to them when they ask how their money is being invested and which returns should they expect. Yet this money belongs to them,” Koceyo says. It is worth noting that most RBA rulings, which according to Koceyo mostly favour the pension schemes and fund managers are usually overturned by the tribunal.
Koceyo says RBA is only concerned with growing the industry without looking at the sad plight of pensioners. “Most of the cases before the tribunal are dismissed because RBA failed to take the interests of the pensioners,” Koceyo argues. “RBA is only concerned with growing the industry; that is why you will find them in forums saying proudly that the industry has grown from Sh900 billion to Sh1 trillion and so on, RBA feels if huge payments are made to pensioners, that will destabilise the industry.”
RBA, however, defends itself saying it has done enough. RBA Deputy Chief Executive Officer Charles Machira, when contacted by the Financial Standard, said they do indeed take seriously pensioners problems. “If the pensioners have a problem with their scheme, they first come to us.
Then we rule. If they are not happy, they go to the tribunal. We are very much aware of cases such as the National Bank,” noted Machira. “But RBA did not appeal the tribunal ruling in that case. RBA has done the best that it could to help pensioners and it is not fair to say that we have not helped them.”
Even as the regulator is quick to defend itself, the tribunal as found RBA to be in glaring fault in many other cases. In a ruling on February 10, 2017 the tribunal faulted RBA in a case where pensioners had sued the Kenya Airports Authority Staff Superannuation Scheme.
The scheme was underpaying pensioners their monthly emoluments much to the chagrin of the tribunal while RBA watched. Employees’ pension Pensioners in the county governments whose fund, the Local Authorities Pensions Trust (Laptrust) is run by CPF Financial Services Group, have also not been saved the pain.
Three weeks ago, CPF revealed that County Governments have not been remitting employees’ pension to the Laptrust amounting to Sh18.6 billion. The public campaign among fund managers and RBA is that Kenyans should be encouraged to save more so that they can have decent life retirement, which has however been challenging. Renowned fund managers have urged the government to make saving in a pension fund mandatory for Kenyans – both in formal and informal employment. But pensioners who saved their entire lives such as Langat find such a call hypocritical and meant to continue fleecing the grieving pensioners.
“Trust me. If I had known as a young man in 1975 the troubles that would befall me when I grow old, I would have invested my earnings rather than save in any pension fund,” Langat says grimly. “But it is too late for me now. I only hope the young people in employment today will learn from my predicament and be careful as they deal with pension schemes.”